Difference between Coasean and Pigouvian Solution to an environment problem

Difference between Coasean and Pigouvian Solution to an environment problem Explain in your own words the difference between a Coasean and a Pigouvian solution to an environmental problem? Which type of solution do you prefer, and why? The Explanation of the Difference between Coasean and Pigouvian Solution to an environmental problem. In a very simple way, Pigouvian solution prefer to use government intervention to solve externality while Coasean solution prefer to use market method to solve externality. In detail: Pigouvian theory is based on the method of modern economics especially based on welfare economics; and Pigouvian theory provides a perspective systematic study of the externality problems. According to Pigouvian theory the marginal private net output and marginal social net output has following relationships: Besides the increasing of marginal private benefits, if other people can still get benefit from the private activities, then the marginal social net benefit is greater than the marginal private net benefits; on the other hand, if other peoples benefit is decreasing due to the private activities, then the marginal social net output is less than the marginal private net output. In the first situation the society will get the Marginal social benefit; in the second situation the will face the Marginal social cost. Actually, Externality is caused by the inconsistency between marginal private cost and marginal social cost. .Without externality, the marginal private cost of production or consumption of an item is equal to the cost of itself. When there are negative externalities, there will cost to compensate these externalities. By adding marginal private cost with the marginal external cost we will get the marginal social cost. On the other hand, when there are positive externalities, the benefits which generated by business activities are not fully occupied by the company, but will also become some external social benefits. Through economic model, Pigou shows that because of the presence of external economic effects, the Pareto optimal allocation of social resource can not be achieved by purely individualistic mechanism. Since there is a deviation among the marginal private benefit and marginal social benefit, marginal private cost and marginal social cost; therefore the maximization of social welfare can not be achieved only through free competition. The Government should take appropriate economic policies to reduce this deviation as much as possible. The proper policy is that: when the marginal private cost is less than marginal social cost ( negative externality ), government should impose taxes; when the marginal private benefit is less than marginal social benefits (positive externality) then the government should provide incentives and subsidies. Pigou believes that by using such taxes and subsidies, the externality problem could be internalized. And such policy is known as Pigovian solution, and the tax is called Pigouvian tax. Pigovian solution has been widely used. In the field of infrastructure, the policy is who invest who benefits; in the environmental protection, the policy is who pollute who pay(a.k.a Polluter Pays Principle PPP). Over the years, the problem of how to internalizeof external effects is dominated by Pigouvian theory. To some extent, Coase theory is developed through the criticizing of Pigouvian theory. Coases critique of the Pigovian solution are focused on the following three aspects. First, the externality is very complex; it is not as simple as one side damages the other side. For example, in the case of chemical factory vs. residents, it is unfair to tax the factory without discussing whether the factory has the right to emission or not. Because, it maybe the case that the factory is established years before any resident areas was setup, and in this case, the factory may have the emission rights(The example of factory vs resident is from Ronald CoaseThe problem of Social Cost, Journal of Law and Economics Vol 3:1(1960)). In order to reduce the emission, perhaps the government should encourage residents purchase the redemption instead of just posing tax on the factory. Second, in the case of zero transaction costs, the Pigouvian tax is absolutely unnecessary. Because in this case, through voluntary negotiation of parties, the optimal allocation of resources can be reached. In th is case, with the help of clearly defined property rights, voluntary negotiation can also achieve the optimal level of allocation just as the same effect through the Pigovian solution, then why should the government intervene? Third, even in the case of non-zero transaction costs scenario, we still need to balance the cost of using government and using voluntary negotiation. Pigouvian solution may be an effective institutional arrangements, it also maybe an inefficient institutional arrangements. According to Coase theorem: If the transaction cost is zero, no matter how the initial definition of property rights is, optimal allocation of resources can be achieved through market; if there is non-zero transaction costs situation, then maybe the institutional arrangements and choice is important, however people still need to do a cost-benefit-analysis of about the government intervention. In order to solve the problem of externality, Coasians market solution could just be as useful as Pigovian solution. Coasian solution shows that even there is a market failure it doesnt automatically means we should use government intervention. Which type of solution do you prefer, and why? I dont prefer either one, I think a mix use of both solutions will be more helpful. ThePigovian theory/solution has some limitations. First, the Pigou theory presupposes there is a function of the existence of the so-called social welfare, and the government is the natural representative of public interest, and the government can perceive the public interest and then choose the right policy to reduce the externalities in economic activity through intervention. However, the fact is that public policy itself maybe flawed. Second, the use of Pigovian solution is based on the premise that the government knows the cause of externalities can calculate all marginal costs or benefits, however it is impossible for any government to obtain all information to make a Pareto optimal allocation of resources. In theory, Pigouvian solution is perfect, but the actual implementation maybe largely constrained. Third, government intervention also makes costs. If the cost of Government intervention is more than the losses caused by externalities, then there is no reason for use to use g overnment intervention .Fourth, the Pigovian solution may cause the rent-seeking activities, which will lead to waste of resources and distortions of resource allocation. On the other hand, the Coasian solution is also limited. The fist problem is that in order to make the Coasian solution work, the market should be developed, however, for many developing countries, the whole economy system is still in transforming, I dont think Coasian solution can work very well without a certain protection level toward property right. Second, the costs of voluntary negotiation transaction need to be considered. The feasibility of voluntary consultation is depending on the size of transaction costs. If the transaction costs are higher than the social benefits, then why should we have such negotiation. Third, the voluntary negotiation is based on the premise that property rights are clearly defined. In fact, some property rights of environmental resources such as property rights are often difficult to define or very costly to define. For the environmental pollution problems, policy makers should consider the characteristics of pollution sources, the different costs of regulatory management and institutional arrangement; they should also consider the degree of maturity of the market and many other conditions. Only through a comprehensive consideration can we achieve a better solution.

Of Mice and Men Essay Essay

Throughout the book, â€Å"Of Mice and Men† George is Lennie’s everything! From dusk to dawn he is Lennie’s caretaker, friend, and he also works in place of himself and Lennie, too! He doesn’t have the easiest job in the world, either. He is faced with many challenges throughout the book. I do believe that towards the end George was finally getting enough, and he was getting tired of watching Lennie struggle. It got the best of him in a way. George has a job as a ranch hand out on the ranch. He does a little bit of everything. From making sure that the animals are in good health, and to helping the boss with anything he needs. George even watches over the slaves, to make sure they are doing what they need to be doing and are staying away from the whites. He carries a lot of responsibilities! He is also doing Lennie’s job at the same time. As we found out very quickly, Lennie is not the best at doing the task, due to his mental illness. He doesn’t know his strength, and tends to hurt/kill people and animals. Lennie has a heart of gold, and means absolutely no harm. Because of Lennie’s mental state, he needs a caretaker. George has been the one to step up to the plate and take that position. They got kicked out of Weed because Lennie went to feel a lady’s dress, and she accused him of rape. George somewhat felt guilty because as his caretaker it is his responsibility to make sure and keep an eye on him. George has to keep a close eye on Lennie and make sure that he is doing right. Any wrong thing that he may do could easily fall back on George, and they can lose everything, such as their job and shelter. At the end of the book, George had had enough of watching Lennie do wrong. He knew that after killing Curley’s wife, it could be something much worse, and being the friend he was he couldn’t watch him go through that anymore! As a friend, George is Lennie’s everything! Throughout the book, George was Lennie’s only true friend. He understood him, when everyone else didn’t. George knew when he messed up, but he still treated him like a best friend. He was more than just a caretaker, he was like a brother! I give props to George! He had been around the world and back with Lennie and he still loved him for the person he was. Even when he killed things, he was still there  and didn’t think of him any less. Now that my friends, is a TRUE friend! This book was very touching, and sad. It helped open my eyes to realize that there really are people out there who do wrong, but don’t mean to. You may be proven guilty, but that doesn’t mean that you aren’t innocent. George really was a great friend to Lennie! He had a lot of responsibility on his shoulders! He would be one to look up to. Next time you see someone do wrong, you need to stop and ask yourself, â€Å"Did they really mean that?†

Taking a Look at Social Networking - 1043 Words

This is the generation of technology. Laptops, tablets and cell phones are almost everyone’s best friends. There are thousands of people who wake up with the cell phone alerts, spend time with social network friends and sleep with the music on their tablets and laptops. In fact, in our society, there are nine months babies watching YouTube videos on their parents’ cell phone. Likewise, there are ten/twelve-year kids texting their friends dozens of times a day. Significantly, there are grown folks exercise networking sites like Facebook, Twitter etc. all day along. Ocala states that â€Å"The policy notes that three-quarters of kids aged 12-17 own cell phones; nearly all teens send text messages, and many younger kids have phones giving them online access.† Social network sites are adversely affecting the new generation by serving as an easily accessible platform to commit social crimes, by deteriorating their health both physically and psychologically, and by cre ating a generation isolated with their friends, families and neighborhoods. Unknowingly the new generation is falling into the social networking sites as a podium for making social crimes. It’s sad, but honestly speaking- kids and youngsters are really obsessed to these sites. They wish for the virtual world than the real world. These days they have very little time for their family talks and peer group discussions. 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Analysis Of The Book Oliver Twist - 1298 Words

Oliver Twist Recently for a project for an English class, the students were asked to do an assignment of reading Oliver Twist. This is the first time most of the students had read the novel. Some of the students prefer to engage their learning by watching the movies of novels instead of reading the material. Surprisingly, most of the students enjoyed the late Charles Dickens. They greatly adored all of the plot twists and how they, the readers, were always on their toes until the next chapter, â€Å"I don’t quite really remember when it was easy to put down the book.† –Karina Gonzalez The author of this classic novel was the late Charles Dickens; He was born on the 7Th of February in the year of 1812 in Portsmouth, Hampshire, England. He was born into a family of ten members including his parents as well as a poverty-stricken class (what class means is a name to say for a rank of something.) They lived near the countryside, until 1822 when the family was forced to move the city of Camden Town, which is a poor neighborhood in London. They were forced because of financial issues and his father was sent to prison because of a great deal of debt. Since the situation with young Charles’s father, the boy had to quit school go work in a boot-blacking factory to help support his family. While he looks back at his experience, Dickens saw it as the moment he said goodbye to his youthful innocence, stating that he wondered â€Å"how [he] could be so easily cast away at such a young age.†Show MoreRelatedIrony, satire and humour in Oliver Twist1656 Words   |  7 Pages Analysis of Dickens use of irony, satire and humour in Oliver Twist. There are multiple examples throughout Oliver Twist of irony, satire and humour. Although a dark novel, there are many moments of humour and an extraordinary amount of chuckling, giggling and knee-slapping by characters. 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Introduction†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦3 2. Biography of Charles Dickens†¦.†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦..†¦Ã¢â‚¬ ¦....4 3. Oliver Twist†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.5Read MoreOliver Twist And The Childs Story1306 Words   |  6 Pagesbiographical information will make readers believe that most of his stories come from mysterious murders and detective investigation crimes. One of Charles Dickens stories, â€Å"Oliver Twist† reveals that it is written about his own life experience growing up and his feelings of abandonment issues from his father (Marks 3). 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