(BQ) Part 2 book "Economic" has contents: The economics of environmental protection; taxation and public expenditure, trade policy; inflation and disinflation; output and prices in the short run; from the short run to the long run - The adjustment of factor prices,.and other contents. | The Economics of Environmental Protection In almost everything we do, we are subject to some form of government regulation. The system of criminal law regulates our interactions with people and property. Local zoning laws regulate the ways in which the land that we own or occupy may be used. Regulatory commissions set rates for electricity, natural gas, local telephone service, and a host of other goods and services. Seat belts, brake lights, turn signals, air bags, internal door panels, bumpers, and catalytic converters are compulsory and regulated in quality all in a single industry. The list goes on and on. A good case can be made that various governments in Canada have more effect on the economy through regulation than through taxing and spending. The focus in this chapter is on a specific type of government regulation, one that has become increasingly important in recent years. In particular, we examine the negative externalities that lead to environmental degradation and the various government policies designed to address them. As we will see, policies intended to protect the environment do not always do so in an efficient manner. One of the central themes in this chapter is that the information available to the regulatory agencies, especially regarding firms technologies for reducing pollution, is generally incomplete. This lack of good information leads to the result that market-based environmental regulations are usually more successful than methods based on the government s direct control. The chapter concludes with a discussion of a specific environmental challenge that has become a crucial policy issue. We examine the issue of how greenhouse-gas emissions are contributing to global climate change, the technical challenges associated with reducing these emissions, and policies designed to address this enormous challenge. 17 L LEARNING OBJECTIVES In this chapter you will learn 1 how an externality can be internalized, and how this can lead to .
