Why might bargaining break down when parties negotiate to remedy a market failure and its associated externality?
What will be an ideal response?What will be an ideal response?
Two of more parties might fail to address an externality through voluntary negotiation because the bargaining process can break down for several reasons. First, bargaining can be impractical, in that it can require a large amount of time, effort and resources, making it unlikely that a solution will be found. Second, the assignment of property rights can be ambiguous. It may not be clear to whom property rights are initially assigned, slowing the negotiation process or even halting it. Third, efficient contracts may be difficult or expensive to enforce. Finally, the parties involved in the negotiation may have limited information about each other's costs and benefits, which for example, may lead one to exaggerate the costs associated with abatement.
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Refer to Table 9-1. The unemployment rate for this simple economy equals
A) (100/1,100 ) × 100. B) (100/20,000 ) × 100. C) (100/15,000 ) × 100. D) (100/1,000 ) × 100.
If total explicit costs are equal to total implicit costs, then economic profit is zero
Indicate whether the statement is true or false
The greatest expansion of the automobile industry occurred in the decade of the ______.
Fill in the blank(s) with the appropriate word(s).
Your economics professor has announced that he or she will assign final grades as follows: the top 20 percent of students will get an A, the bottom 20 percent of students will get an F, and everyone else will get a C. You would expect that, as the semester progresses, students who really care about getting an A will:
A. study less and less to maintain low standards. B. try to forget about the grading scheme. C. maintain a stable agreement to not study for exams. D. engage in a positional arms race, studying more and more.