Draw a graph and explain fully the case that a private firm creates negative externalities, covering the output quantities, prices and profits that occur and should be set for social optimum. After that, add and explain fully how the government can use Pigou tax to solve the above negative externalities problems and obtain the social optimum. (Your points depend on the full dynamic details)

Draw a graph and explain fully the case that a private firm creates negative externalities, covering the output quantities, prices and profits that occur and should be set for social optimum. After that, add and explain fully how the government can use Pigou tax to solve the above negative externalities problems and obtain the social optimum. (Your points depend on the full dynamic details)

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter11: Monopoly And Antitrust Policy

Section: Chapter Questions

Problem 3SCQ: Some years ago. two intercity bus companies, Greyhound Lines, Inc. and Trailways Transportation...

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Discussion Question 13-11 Network effects give Internet firms a boost with respect to first mover advantages. This is because with network effects O whichever firm's network becomes the largest will become the most valuable to potential customers and will therefore attract even more users. O only firms with access to proprietary technology can form a network. O networks can be networked to create even more traffic and profits. O the first internet firm to establish a network has the most influence over any regulation. When network effects are at play, an increase in the number of people using a given product will shift the demand curve to Oright and make it more elastic. O the right and make it more inelastic. O left and make it more inelastic. O left and make it more elastic. NOV 12 tv NA 10
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Some years ago. two intercity bus companies, Greyhound Lines, Inc. and Trailways Transportation System, wanted to merge. One possible definition of the market for this case was the market for intercity bus service. Another possible definition was the market for intercity transportation, including personal cars, car rentals, passenger trains, and commuter air flights.' Which definition do you think the bus companies preferred, and why?
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