IDEAS home Printed from https://ideas.repec.org/h/spr/sptchp/978-3-319-62662-8_6.html
   My bibliography  Save this book chapter

Externalities and the Limits of Markets

In: Workbook for Principles of Microeconomics

Author

Listed:
  • Martin Kolmar

    (University of St. Gallen)

  • Magnus Hoffmann

    (University of St. Gallen)

Abstract

A local government is thinking of prohibiting smoking in restaurants. Check the following arguments for their economic correctness. Assume that, by smoking, smokers have a negative interdependence with non-smokers.Now, assume that smokers and non-smokers negotiate in a restaurant and strike a deal. The smokers receive the right to smoke or the non-smokers receive the right for the smoking to cease. 1. The originator of the external effect and the originator of the interdependency are one and the same. 2. Interdependencies are external effects that have not been internalized. 3. The Coase Irrelevance Theorem states that, in an economy with fully allocated property rights, the market equilibrium is always efficient. 4. If a group of individuals suffers from air pollution caused by a local chemical factory, this is a negative external effect.

Suggested Citation

  • Martin Kolmar & Magnus Hoffmann, 2018. "Externalities and the Limits of Markets," Springer Texts in Business and Economics, in: Workbook for Principles of Microeconomics, chapter 6, pages 47-74, Springer.
    • Handle: RePEc:spr:sptchp:978-3-319-62662-8_6
    DOI: 10.1007/978-3-319-62662-8_6
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:sptchp:978-3-319-62662-8_6. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.