Term
|
Definition
- the uncompensated impact of one person's actions on teh well-being of a bystander
- positive externality: if the impact on the bystander is beneficial
- negative externality: if the impact on the bystander is adverse |
|
|
Term
|
Definition
| includes the private costs of the product produced plus the costs to those bystanders affected adversely by the externality |
|
|
Term
| internalizing the externality |
|
Definition
- altering incentives so that people take account of the external effects of their actions
- for negative externalities, internalizing the externality would require a tax
- for positive externalities, internalizign the externality would include a subsidy (i.e. education) |
|
|
Term
|
Definition
| the impact of one firm's research and production efforts on teh other firms' access to technological advance. |
|
|
Term
|
Definition
| government intervention in the economy that aims to promote technology enhancing industries |
|
|
Term
|
Definition
| patent that internalizes the externality of technological spillover by giving a firm the right to capture the economic benefit of whatever technological breakthrough it made |
|
|
Term
|
Definition
| the proposition that if private parties can bargain without cost over the allocation of resources, they can solve the problem of externalities on their own |
|
|
Term
|
Definition
| the cost that parties incur in the process of agreeing to and following through on a bargain |
|
|
Term
|
Definition
| a tax designed to induce private decision makers to take account of the cosial costs that arise from a negative externality |
|
|
