Principles of Economics (12th Edition)
Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134078779
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Chapter 16, Problem 1.6P
To determine

Whether the private individuals involved in externalities would reach the efficient outcome through negotiations.

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What conditions are needed for the Coase Theorem to be a viable way to correct externalities?
Describe a positive or negative externality that you have observed in your life. In the example you provide, determine if the externality is positive or negative, explain why, and discuss if you feel like government intervention is present and/or needed. If so, how does (or how could?) the government increase market efficiency?
What are “public goods”? Pick a government good/service that you consume, define what makes it a public good (how is its non-rival and non-excludable).  As we discussed in class, the existence of externalities creates an efficiency problem in the provision of these goods and services.  Unlike the private sector, State and Local Governments can intervene.  Using the example of the public good, you have provided, please provide an example of an externality that will impact its provision, and detail how a government could/should intervene.
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