Market-based instruments, Public Economics

Market-Based Instruments

There is a divergence between private cost and social cost in the case of polluting activities. In order to regulate these activities the CAC approach puts emphasis on imposition of bans and controls. The MBIs, on the other hand, use economic incentives or market stimuli for internalizing the environmental costs. The main aim of the MBIs is creation of a market mechanism where the social cost of pollution will be borne by the polluters.

Thus, the divergence between private cost and social cost will be avoided and polluting goods will be produced at their socially optimum level. The MBIs are developed on the basis of the principles of the market structure, and attempt to remove the distortions emerging out of inefficient use of resources by removal of subsidies and introduction of environmental charges on emission, input and output.

 

Posted Date: 12/18/2012 6:49:05 AM | Location : United States







Related Discussions:- Market-based instruments, Assignment Help, Ask Question on Market-based instruments, Get Answer, Expert's Help, Market-based instruments Discussions

Write discussion on Market-based instruments
Your posts are moderated
Related Questions
U=4X+G where X is private spending and G is public spending. what is the marginal rate of substitution between public and private

examine the efficiency of quantitative credit control instruments.

Problem 1: i) Define the three main Economic Systems? ii) How can knowledge on price, income and cross price elasticity of demand, be helpful to the Government and a firm,

Normal 0 false false false EN-IN X-NONE X-NONE MicrosoftInternetExplorer4

Types of production function

We live in a globalized world economy. Our policy agenda, as we have discussed earlier have changed enormously to include environment, humanity in general as well as the conventio

Suppose a given demand curve for massage therapy services. In the context of giving massage therapy services, list, and explain in detail, 5 different variables that may cause an i

Suppose there are two inputs in the production function, labor (L) and capital (K), which can be combined to produce Y units of output according to the following production functio

how do a traditional economy, a market, a centrally planned economy, and a mixed economy differ?

Normal 0 false false false EN-IN X-NONE X-NONE MicrosoftInternetExplorer4