[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/a/agr/journl/v10(539)y2009i10(539)p35-42.html
   My bibliography  Save this article

Principles for Private and Public Internalisation of Externalities. A Synoptic View

Author

Listed:
  • Tatiana Mosteanu

    (The Bucharest Academy of Economic Studies)

  • Mihaela Iacob

    (The Bucharest Academy of Economic Studies)

Abstract
Externalities represent a market failure situation and they appear when one person´s activities influence other person´s welfare in a way that is outside the market mechanism. In contrast to the effects transmitted by market prices, externalities negatively affect the economic efficiency. They arise in everyday life and are noticed only if the effects are obvious. Ronald Coase´s approach started from the premises that externalities can be internalized. His model provides private sector means to defend against market failure. Coase´s solution to internalize externalities based on negotiation between the involved parties, given the property rights, has influenced the free market approach of market failures and today many economists consider that governments should work with the market and not against it using taxes and regulations. In the mainstream literature it is said that if for small local externalities the private sector can find solutions to solve problems, big scale externalities, such as global warming, need government intervention. As far as the last ones are concerned, we can talk about: a) the Pigouvian tax, which is a tax levied on polluting activities; b) the Pigouvian subsidy, given to those who suffer from negative externalities; c) the subsidy paid to individuals or firms to conduct activities with positive externalities; d) legal regulations, such as limits for emitting polluters and restrictions regarding the time of day or year when negative externalities can be legally produced.

Suggested Citation

  • Tatiana Mosteanu & Mihaela Iacob, 2009. "Principles for Private and Public Internalisation of Externalities. A Synoptic View," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 10(10(539)), pages 35-42, October.
    • Handle: RePEc:agr:journl:v:10(539):y:2009:i:10(539):p:35-42
    as

    Download full text from publisher

    File URL: http://store.ectap.ro/articole/416.pdf
    Download Restriction: no
    File URL: http://www.ectap.ro/articol.php?id=416&rid=54
    Download Restriction: no
    ---><---

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:agr:journl:v:10(539):y:2009:i:10(539):p:35-42. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Mircea Dinu (email available below). General contact details of provider: https://edirc.repec.org/data/agerrea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.