财政学第五章答案

Chapter 5 – Externalities

Brief Outline

1.The Nature of Externalities

2.Graphical Analysis

a.Implications

b.Conclusion

3.Private Responses

a.Bargaining and the Coase Theorem

b.Mergers

c.Social Conventions

4.Public Responses to Externalities: Taxes and Subsidies

a.Taxes

b.Subsidies

5.Public Responses to Externalities: Emissions Fees and Cap-and-Trade Programs

a.Emissions Fee

b.Cap-and-Trade

c.Emissions Fee versus Cap-and-Trade

mand-and-Control Regulation

6.The US Response

a.Progress with Incentive-Based Approaches

7.Implications for Income Distributions

a.Who Benefits?

b.Who Bears the Cost?

8.Positive Externalities

a. A Cautionary Note

Answers to End-of-Chapter Questions

1.Before passengers were charged for checked bags, they would choose whether to check

bags or carry them on based on whether they were willing to trade time for the hassle of dealing with carry-on bags. That is, passengers who valued saving time by not having to deal with baggage claim more than the cost of dealing with carry-on baggage will choose to carry on. The fact that passengers are now charged for checked baggage but not for baggage carried onto the plane will inefficiently allocate overhead space. Passengers will carry on more and bigger bags to save the fee charged, resulting in full overhead luggage containers. Overhead space will go to the first passengers on the plane, rather than being distributed more evenly. Bags checked (without a charge) at the gate forces some who would choose to carry on even without the fee to have to check, which is a loss in efficiency. Those who elect to carry on to avoid the fee, but would rather check their bags, also result in an inefficiency.

2.The Coase theorem suggests that the church and the comedy club could negotiate. If the

church possessed the right to the “noise” in the building, the comedy club could pay the church to be quiet. If the comedy club possessed the right to quiet in the building, the church could compensate the club for the noise.

3.It is the case that a carbon tax would be passed on to the consumer. The tax raises costs

to the producer for producing the final good. These increased costs would decrease supply, which will increase the price of that final good. In a cap and trade system, businesses must purchase permits in order to emit carbon. If the cost of purchasing and using abatement equipment is less than the cost of buying a permit, the business will use abatement equipment. In either case (buying a permit or using abatement equipment) costs for the producer increase, decreasing supply and increasing the price of the final good. If the carbon tax and the number of permits issued in the cap and trade system were set appropriately, the outlays for both programs would be the same.

4.

a.The number of parties per month that would be provided privately is P.

b.See schedule MSB p.

c.P*. Give a per-unit subsidy of $b per party to induce the correct number of parties.

d.The optimal subsidy is $b. The total subsidy=abcd. “Society” comes out ahead by

ghc, assuming the subsidy can be raised without any efficiency costs.

(Ca ssanova’s friends gain gchd; Cassanova loses chd but gains abcd, which is a

subsidy cost to government.)

5.The payment for signing a waiver is a negotiation as suggested by the Coase Theorem. If

residents accept the payment and sign the waiver, they are signaling that the noise cost to them is less than the payment. If the residents choose not to accept the payment and sign the waiver, the payment is not great enough to cover the cost of the noise. The Coase Theorem suggest in this case that further negotiation could occur.

6.On the surface, the tax on saturated fat seems like a Pigouvian tax, if you assume that the

$3 is equivalent to the level of the damage from the saturated fats. The commentator is not correct in his criticism that the tax is levied on an input rather an outcome. If the tax is properly set and is the direct cause of unhealthy consumers, the efficient level of saturated fat will be consumed. However, this tax suffers from the problem of assuming that the saturated fat leads directly to poor health outcomes and is the only source of unhealthy outcomes. Some consumers are healthy no matter the level of consumption of saturated fats. Others are unhealthy even with no consumption of the saturated fats. And many consumers will simply reallocate their consumption to nontaxed unhealthy foods.