Environmental Protection and Negative Externalities (Economics)

Recall cards on the economics of pollution and environmental policy. Externalities: positive and negative spillovers, social versus private costs, and why a negative externality causes market failure and shifts the supply curve. Command-and-control regulation: allowable-quantity and technology mandates, their inflexibility and weak incentives, and the EPA, Clean Air Act, and Clean Water Act. Market-oriented tools: pollution charges, marketable permits, cap-and-trade, and Coase's property-rights insight. Benefits and costs: the marginal benefit and marginal cost of pollution reduction and the economically optimal level. International issues: cross-border externalities, global warming, and biodiversity. The output-versus-environment production possibilities frontier tradeoff.