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11 Cards in this Set
- Front
- Back
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2 reasons that justify gvmt intervention |
Market failure Equitable distribution of resources |
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Methods of intervention sub headings |
regulation Extending property rights Evironmental taxes Tradeable Perits financial intervention state production Income and other transfers |
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How do they regulate - |
controls quality and quantitity of goods produced/consumed. Prescroptions FSA sets minimum standard for food Age limits on cigarettes Competition commission ruled that Interbrew could not takeover Bass brewer because it would be too dominant |
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Issues with regulation |
If MSC = MSB Can be difficult to police often prepared to pay the fine as it is too low |
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Benefits of extending properly rights |
Water companies and the EPA are able to seek compensation from companies and individuals which pollute rivers. Internalising the externality.
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Issues with extending property rights |
No way to enforce it hence the world bank has given $110m to 11 developing countries to hero reduce emissions. Enforcement is very expensive for owner Takes time difficult to place monetary value on loss to society |
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Benefits of environmental taxes |
pollution decreases only necessary pollution is used Heavy polluters must cut back light polluters can expand |
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Issues with environmental taxes |
Government often finds it very difficult to establish tax level aadmin is expensive |
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benefits of traceable permits |
everyone reduces pollution as much as they can as they can sell the rest |
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Financial intervention |
in order to influence production it uses taxes and subsidies in order to benefit society |
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Income and other transfers |
redistribution of income justified as it is trying to create an equitable distribution of income in the economy in the form of benefits or income support or JSA |
