Externalities in a Second-Best Environment
Abstract
Chapter 22 begins with a reworking of the first-best analysis of nonexclusive goods in a many-person setting with distorting taxation, using Diamond’s model as the analytical framework. It presents the Atkinson/Stern analysis of whether the provision of the public good increases or decreases with distorting taxation. The chapter then turns to an extended discussion of the Coase theorem, focusing on issues related to bargaining. The section concludes with a discussion of the use of Coasian-style Individual Transferrable Quotas to sustain fishing stocks, which are successfully transforming the fishing industry.
Keywords
Bargaining set stability; Coase theorem; Individual transferable quotas ...Get Public Finance, 3rd Edition now with the O’Reilly learning platform.
O’Reilly members experience books, live events, courses curated by job role, and more from O’Reilly and nearly 200 top publishers.
