05Externalities Problems and Solutions（课件）- 《财政与金融》同步教学（人民大学·第五版）

5.1 Externality Theory 5.2 Private-Sector Solutions to Negative Externalities 5.3 Public-Sector Remedies for Externalities 5.4 Distinctions Between Price and Quantity Approaches to Addressing Externalities 5.5 Conclusion Externalities: Problems and Solutions 5 1 of 37 1 Introduction to Externalities: Global Warming 5 In 1997, representatives from over 170 nations met in Kyoto, Japan, to negotiate an international pact to limit the emissions of carbon dioxide. Carbon dioxide emissions contribute to global warming, which could cause enormous damage. The cost of reducing the use of fossil fuels, particularly in the major industrialized nations, is immense—perhaps 10% of GDP for the United States. of 37 C H A P T E R 5 ■ E X T E R N A L I T I E S : P R O B L E M S A N D S O L U T I O N S 2 Average Global Temperature, 1880−2014 5 of 37 C H A P T E R 5 ■ E X T E R N A L I T I E S : P R O B L E M S A N D S O L U T I O N S 3 Externalities: Problems and Solutions 5 Global warming is a classic example of an externality, which is a kind of market failure. Externality: Externalities arise whenever the actions of one party make another party worse or better off, yet the first party neither bears the costs nor receives the benefits of doing so. Market failure: A problem that causes the market economy to deliver an outcome that does not maximize efficiency. of 37 C H A P T E R 5 ■ E X T E R N A L I T I E S : P R O B L E M S A N D S O L U T I O N S 4 Negative Externalities 5.1 Negative production externality: When a firm’s production reduces the well-being of others who are not compensated by the firm. Pollution from steel production, dumped in a river, hurts fishermen. Negative consumption externality: When an individual’s consumption reduces the well-being of others who are not compensated by the individual. Smoking at a restaurant affects the health and enjoyment of others. of 37 C H A P T E R 5 ■ E X T E R N A L I T I E S : P R O B L E M S A