Chapter 6
Consumption Externalities
Abstract
Chapter 6 analyzes three kinds of policy-relevant consumer externalities: individualized and aggregate externalities resulting from private activity, and nonexclusive goods. A number of policy issues are discussed, including Pigovian taxes, the Coase theorem, Lindahl pricing and the benefits-received principle, the free riding experiments, Clarke taxes for allocating nonexclusive goods, and why consumers often reject Pigovian taxes even though they are welfare improving.
Keywords
Aggregate externality; Benefits-received principle; Clarke taxes; Coase theorem; Consumption externality; Free riding; Individualized externality; Lindahl prices; Mechanism design problem nonexclusive good; Pigovian tax (subsidy); ...Get Public Finance, 3rd Edition now with the O’Reilly learning platform.
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