Lec 8 - Lecture 5 - Payment in Accordance with Product. ECON 20100: The Elements of Economic Analysis E. Glen Weyl, Assistant Professor of Economics and the College "Payment in Accordance with Product," October 18, 2011. The first part of this course discusses markets with one or a few suppliers. The second part focuses on demand and supply for factors of production and the distribution of income in the economy. This course also includes some elementary general equilibrium theory and welfare economics. This lecture considers the most fundamental market failure: externalities not mediated by the price system. We begin by considering what an externality is and is not, contrasting pecuniary and real externalities and considering some difficult cases. We then consider policy remedies for externalities operating through taxation, regulation or litigation and compare their relative advantages and disadvantages. Finally we consider the Coase-Stigler critique of policies to deal with externalities and why information is crucial to externality policy. For readings associated with this lecture and slides, visit: http://www.glenweyl.com/teaching
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