Module 11: Environmental Protection and Negative Externalities

The problem of pollution arises for every economy in the world, whether high-income or low-income, and whether market-oriented or command-oriented. Every country needs to strike some balance between production and environmental quality. This chapter begins by discussing how firms may fail to take certain social costs, like pollution, into their planning if they do not need to pay these costs. Traditionally, policies for environmental protection have focused on governmental limits on how much of each pollutant could be emitted. While this approach has had some success, economists have suggested a range of more flexible, market-oriented policies that reduce pollution at a lower cost. We will consider both approaches, but first let’s see how economists frame and analyze these issues.

Upon completion of this module, you will be able to:

1. Explain and give examples of positive and negative externalities
2. Identify equilibrium price and quantity
3. Evaluate how firms can contribute to market failure
4. Explain command-and-control regulation
5. Evaluate the effectiveness of command-and-control regulation
6. Show how pollution charges impact firm decisions
7. Suggest other laws and regulations that could fall under pollution charges
8. Explain the significance of marketable permits and property rights
9. Evaluate which policies are most appropriate for various situations
10. Evaluate the benefits and costs of environmental protection
11. Explain the effects of ecotourism
12. Apply marginal analysis to illustrate the marginal costs and marginal benefits of reducing pollution
13. Explain biodiversity
14. Analyze the partnership of high-income and low-income countries in efforts to address international externalities
15. Apply the production possibility frontier to evaluate the tradeoff between economic output and the environment
16. Interpret a graphic representation of the tradeoff between economic output and environmental protection

To achieve these objectives: [Edit these items to match your resources and activities.]

1. Read the Module 11 Introduction 
   
2. Read Chapter 11 in the course textbook, Microeconomics.
   
3. Complete the Module 11 Discussion Forum.
4. Complete the Module 11 Quiz.
   
5. For Course Instructors, list any other reading assignments here.  [Include all reading assignments here that are outside of Moodle. Be as concise as possible. More information can be included in the third-party section below, if necessary.]
   
6. Complete the [specific activities in the module. Include all in the order you want them completed.]

Module Pressbooks Resources and Activities