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| when a market exchange affects a third party who is outside or "external" to the exchange; sometimes called a "spillover". |
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| when a market exchange affects a third party who is outside or "external" to the exchange; more formally called an externality. |
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| the third party suffers from the market transaction by others. |
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| the third party benefits from the market trtansaction by others. |
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| costs that include both private costs incurred by firms and also costs incurred by third parties outside the production process, like costs of pollution. |
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| a situation in which the market falls on its own to allocate resources efficiently in a way that balances social costs and benefits. |
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| command- and control regulation |
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| laws that specify the allowable quantities of pollution and may also detail which pollution-control technologies must be used. |
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| a tax imposed on the quantity of pollution that a firm emits; aka "pollution tax" |
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| a permit that allows a firm to emit a certain amount of pollution, where firms with more permits than pollution can sell the remaining permits to other firms. |
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| the body of law including patents, trademarks, copyrights, and trade secret law that protect the right of inventors to produce and sell their inventions. |
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| research on fundamental scientific breakthroughs that may offer commercial applications only in distant future. |
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| research focused on a particular product that promises an economic payoff in the short-or medium- term |
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| a good that is nonexcludable and nonrivalrous, and thus is difficult for market producers to sell to individual consumers. |
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| when it is costly or impossible to exclude someone from using the good, and thus hard to charge for it. |
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| a good where, when one persom uses the good, others can also use it. |
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| the specific amount of income needed for a basic standard of living. |
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| a graph that shows the share of population on the horizontal axis and the cumulative percentage of total income received on the vertical axis. |
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| a tax imposed on the value of an inheritance. |
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