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Bài tập về Kinh tế vĩ mô bằng tiếng Anh - Chương 18

Tham khảo tài liệu 'bài tập về kinh tế vĩ mô bằng tiếng anh - chương 18', kinh tế - quản lý, kinh tế học phục vụ nhu cầu học tập, nghiên cứu và làm việc hiệu quả | Chapter 18 Externalities and Public Goods CHAPTER 18 EXTERNALITIES AND PUBLIC GOODS EXERCISES 1. A number of firms have located in the western portion of a town after single-family residences took up the eastern portion. Each firm produces the same product and in the process emits noxious fumes that adversely affect the residents of the community. a. Why is there an externality created by the firms Noxious fumes created by firms enter the utility function of residents and the residents have no control over the quantity of the fumes. We can assume that the fumes decrease the utility of the residents i.e. they are a negative externality and lower property values. b. Do you think that private bargaining can resolve the problem Explain. If the residents anticipated the location of the firms housing prices should reflect the disutility of the fumes the externality would have been internalized by the housing market in housing prices. If the noxious fumes were not anticipated private bargaining could resolve the problem of the externality only if there are a relatively small number of parties both firms and families and property rights are well specified. Private bargaining would rely on each family s willingness to pay for air quality but truthful revelation might not be possible. All this will be complicated by the adaptability of the production technology known to the firms and the employment relations between the firms and families. It is unlikely that private bargaining will resolve the problem. 278 Chapter 18 Externalities and Public Goods c. How might the community determine the efficient level of air quality The community could determine the economically efficient level of air quality by aggregating the families willingness to pay and equating it with the marginal cost of pollution reduction. Both steps involve the acquisition of truthful information. 2. A computer programmer lobbies against copyrighting software arguing that everyone should benefit from .