Introduction to Positive Externalities and Public Goods

Telemark University College Department of Electrical Engineering, Information Technology and Cybernetics Faculty of Technology, Postboks 203, Kjølnes ring 56, N-3901 Porsgrunn, Norway. Tel: +47 35 57 50 00 Fax: +47 35 57 54 01 Introduction to Visual Studio and C# HANS-PETTER HALVORSEN, 2012.08.17 2 Table of Contents 1 Introduction 5 1.1 Visual Studio 5 1.2 C# . 6 1.3 .NET Framework 6 1.4 Object-Oriented Programming (OOP) . 7 2 Visual Studio . 8 2.1 Introduction . Introduction to Positive Externalities and Public Goods Introduction to Positive Externalities and Public Goods By: OpenStaxCollege View from Voyager I Launched by NASA on September 5, 1977, Voyager 1’s primary mission was to provide detailed images of Jupiter, Saturn, and their moons It took this photograph of Jupiter on its journey In August of 2012, Voyager I entered intersteller space—the first human-made object to so—and 1/3 Introduction to Positive Externalities and Public Goods it is expected to send data and images back to earth until 2025 Such a technological feat has a lot to with economic principles (Credit: modification of work by NASA/JPL) The Benefits of Voyager I Live On The rapid growth of technology has increased our ability to access and process data, to navigate through a busy city, and to communicate with friends on the other side of the globe The research and development efforts of citizens, scientists, firms, universities, and governments have truly revolutionized the modern economy To get a sense of how far we have come in a short period of time, let’s compare one of humankind’s greatest achievements to the smartphone most of us have in our coat pocket In 1977 the United States launched Voyager I, a spacecraft originally intended to reach Jupiter and Saturn, to send back photographs and other cosmic measurements Voyager I, however, kept going, and going—past Jupiter and Saturn—right out of our solar system At the time of its launch, Voyager had some of the most sophisticated computing processing power NASA could engineer (8,000 instructions per second), but by the time it left the solar system (in 2012, actually) we Earthlings were using handheld devices that could process 14 billion instructions per second Still, the technology of today is a spillover product of the incredible feats accomplished by NASA thirty years ago NASA research, for instance, is responsible for the kidney dialysis and mammogram machines that we use today Research in new technologies not only produces private benefits to the investing firm, or in this case to NASA, but it also creates benefits for the broader society In this way, new knowledge often becomes what economists refer to as a public good This leads us to the topic of this chapter—technology, positive externalities, public goods, and the role of government in the encouragement of innovation and the social benefits that it provides Introduction to Positive Externalities and Public Goods In this chapter, you will learn about: • Why the Private Sector Under Invests in Technologies • How Governments Can Encourage Innovation • Public Goods Can you imagine a world in which you did not own a cellular phone or use Wikipedia? New technology changes how people live and work and what they buy Technology includes the invention of new products, new ways of producing goods and services, and even new ways of managing a company more efficiently Research and development of technology is the difference between horses and automobiles, between candles and electric lights, between fetching water in buckets and indoor plumbing, and between infection and good health from antibiotics 2/3 Introduction to Positive Externalities and Public Goods In December 2009, ABC News compiled a list of some of the technological breakthroughs that have revolutionized consumer products in the past 10 years: • GPS tracking devices, originally developed by the defense department and available to consumers in 2000, give users up-to-date information on location and time through satellite technology • In 2000, Toyota introduced the Prius hybrid car, which greatly improved fuel efficiency • Also in 2000, AT&T offered its customers the ability to text on a mobile phone • In 2001, Wikipedia launched a user-generated encyclopedia on the Web • Even though Napster died in 2001, the company launched music downloading and file sharing, which revolutionized how consumers get their music and videos • Friendster kicked off the social networking business in 2003, and Twitter and Facebook followed • In 2003, the Human Genome project was completed It helps to fight disease and launch new pharmaceutical innovations • Also in 2003, the search engine became a way of life for obtaining information quickly The search engine companies also became innovators in the digital software that dominates mobile devices • In 2006, Nintendo launched Wii and changed the way video games are played Players can now be drawn into the action and use their bodies to respond rather than a handheld device • Apple introduced the iPhone in 2007 and launched an entire smartphone industry With all new technologies, however, there are new challenges This chapter deals with some of these issues: Will private companies be willing to invest in new technology? In what ways does new technology have positive externalities? What motivates inventors? Does government have a role to play in encouraging research and technology? Are there certain types ... Embedded Systems Design: An Introduction to Processes, Tools, and Techniques by Arnold S. Berger ISBN: 1578200733 CMP Books © 2002 (237 pages) An easy-to-understand guidebook for those embarking upon an embedded processor development project. Table of Contents Embedded Systems Design—An Introduction to Processes, Tools, and Techniques Preface Introduction Chapter 1 - The Embedded Design Life Cycle Chapter 2 - The Selection Process Chapter 3 - The Partitioning Decision Chapter 4 - The Development Environment Chapter 5 - Special Software Techniques Chapter 6 - A Basic Toolset Chapter 7 - BDM, JTAG, and Nexus Chapter 8 - The ICE — An Integrated Solution Chapter 9 - Testing Chapter 10 - The Future Index List of Figures List of Tables List of Listings List of Sidebars TEAMFLY Team-Fly ® Embedded Systems Design—An Introduction to Processes, Tools, and Techniques Arnold Berger CMP Books CMP Media LLC 1601 West 23rd Street, Suite 200 Lawrence, Kansas 66046 USA www.cmpbooks.com Designations used by companies to distinguish their products are often claimed as trademarks. In all instances where CMP Books is aware of a trademark claim, the product name appears in initial capital letters, in all capital letters, or in accordance with the vendor’s capitalization preference. Readers should contact the appropriate companies for more complete information on trademarks and trademark registrations. All trademarks and registered trademarks in this book are the property of their respective holders. Copyright © 2002 by CMP Books, except where noted otherwise. Published by CMP Books, CMP Media LLC. All rights reserved. Printed in the United States of America. No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written permission of the publisher; with the exception that the program listings may be entered, stored, and executed in a computer system, but they may not be reproduced for publication. The programs in this book are presented for instructional value. The programs have been carefully tested, but are not guaranteed for any particular purpose. The publisher does not offer any warranties and does not guarantee the accuracy, adequacy, or completeness of any information herein and is not responsible for any errors or omissions. The publisher assumes no liability for damages resulting from the use of the information in this book or for any infringement of the intellectual property rights of third parties that would result from the use of this information. Developmental Editor: Robert Ward Editors: Matt McDonald, Julie McNamee, Rita Sooby, and Catherine Janzen Layout Production: Justin Fulmer, Rita Sooby, and Michelle O’Neal Managing Editor: Michelle O’Neal Cover Art Design: Robert Ward Distributed in the U.S. and Canada by: Publishers Group West 1700 Fourth Street Berkeley, CA 94710 1-800-788-3123 www.pgw.com ISBN: 1-57820-073-3 This book is dedicated to Shirley Berger. Preface Why write a book about designing embedded systems? Because my experiences working in the industry and, more recently, working with students have convinced me that there is a need for such a book. For example, a few years ago, I was the Development Tools Marketing Manager for a semiconductor manufacturer. I was speaking with the Software Development Tools Manager at our major account. My job was to help convince the customer that they should be using our RISC processor in their laser printers. Since I owned the tool chain issues, I had to address his specific issues before we could convince him that we had the appropriate support for his design team. Since we didn’t Session VII Externalities and Public Goods Principles of Economics Overview What is an externality? Why do externalities make market outcomes inefficient? What public policies aim to solve the problem of externalities? How can people sometimes solve the problem of externalities on their own? Why do such private solutions not always work? 1 Overview (cont’d) What are public goods? What are common resources? Give examples of each. Why do markets generally fail to provide the efficient amounts of these goods? How might the government improve market outcomes in the case of public goods or common resources? 2 Learning Objectives By the end of this session, students should understand: – what an externality is. – why externalities can make market outcomes inefficient. – the various government policies aimed at solving the problem of externalities. – how people can sometimes solve the problem of externalities on their own. – why private solutions to externalities sometimes do not work. 3 Learning Objectives (cont’d) By the end of this session, students should understand: –the defining characteristics of public goods and common resources. –why private markets fail to provide public goods. –some of the important public goods in our economy. – why the cost–benefit analysis of public goods is both necessary and difficult. – why people tend to use common resources too much. – some of the important common resources in our economy. 4 Externalities and Public Goods Part I Effects of Externalities 6 Introduction One of the principles from Session 1: Markets are usually a good way to organize economy activity. In absence of market failures, the competitive market outcome is efficient, maximizes total surplus. One type of market failure: externality Externalities can be negative or positive 7 Introduction (cont’d) Self-interested buyers and sellers  market outcome is not efficient. Another principle from Session 1: Governments can sometimes improve market outcomes. In presence of externalities, public policy can improve efficiency. 8 Examples of Negative Externalities Air pollution from a factory Late-night stereo blasting from the dorm room next to yours Health risk to others from second-hand smoke 9 Recap of Welfare Economics 0 1 2 3 4 5 0 10 20 30 Q (gallons) P $ The market for gasoline S: private cost D: private value $2.50 25 Source: Mankiw (2011) [...]... of Externalities: Summary  If negative externality – market quantity larger than socially desirable  If positive externality – market quantity smaller than socially desirable  To remedy the problem, or “internalize the externality,” – tax goods with negative externalities – subsidize goods with positive externalities 18 Externalities and Public Goods Part II Public Policies toward Externalities Public. .. position of this demand curve, – The permits system achieves pollution reduction targets more precisely 30 Externalities and Public Goods Part III Private Solution to Externalities Private Solutions to Externalities Types of private solutions: Moral codes and social sanctions, e.g., the “Golden Rule” Charities, e.g., the Sierra Club Contracts between market participants and the affected bystanders 32 Private... and Public Goods Part II Public Policies toward Externalities Public Policies Toward Externalities Two approaches:  Command -and- control policies regulate behavior directly  Market-based policies provide incentives so that Chapter 18 Externalities and Public Goods Topics to be Discussed  Externalities  Ways of Correcting Market Failure  Externalities and Property Rights  Common Property Resources Chapter 18 Slide Topics to be Discussed  Public Goods  Private Preferences for Public Goods Chapter 18 Slide Externalities  Negative  Action by one party imposes a cost on another party  Positive  Action by one party benefits another party Chapter 18 Slide External Cost  Scenario  Steel plant dumping waste in a river  The entire steel market effluent can be reduced by lowering output (fixed proportions production function) Chapter 18 Slide External Cost  Scenario  Marginal External Cost (MEC) is the cost imposed on others for each level of production.  Marginal Social Cost (MSC) is MC plus MEC. Chapter 18 Slide External Costs Price When there are negative externalities, the marginal social cost MSC is higher than the marginal cost. The differences is the marginal external cost MEC. MSC The profit maximizing firm produces at q1 while the efficient output level is q*. Price MSCI MC S = MCI The industry competitive output is Q1 while the efficient level is Q*. Aggregate social cost of negative externality P* P1 P1 MECI MEC D q* q1 Firm output Q* Q1 Industry output External Cost  Negative Externalities encourage inefficient firms to remain in the industry and create excessive production in the long run. Chapter 18 Slide Externalities  Positive Externalities and Inefficiency  Externalities can also result in too little production, as can be shown in an example of home repair and landscaping. Chapter 18 Slide External Benefits Value When there are positive externalities (the benefits of repairs to neighbors), marginal social benefits MSB are higher than marginal benefits D. MSB D P1 A self-interested home owner invests q1 in repairs. The efficient level of repairs q* is higher. The higher price P1 discourages repair. MC P* Is research and development discouraged by positive externalities? MEB q1 q* Chapter 18 Repair Level Slide Public Goods  Free Riders  There is no way to provide some goods and services without benefiting everyone.  Households not have the incentive to pay what the item is worth to them.  Free riders understate the value of a good or service so that they can enjoy its benefit without paying for it. Chapter 18 Slide Public Goods  Establishing a mosquito abatement company  How you measure output?  Who you charge?  A mosquito meter? Chapter 18 Slide The Demand for Clean Air  Clean Air is a public good  Nonexclusive  and nonrival What is the price of clean air? Chapter 18 Slide The Demand for Clean Air  Choosing where to live  Study in Boston correlates housing prices with the quality of air and other characteristics of the houses and their neighborhoods. Chapter 18 Slide The Demand for Clean Air Dollars High Income 3000 2500 Middle Income 2000 Low Income 1500 1000 500 Chapter 18 10 Nitrogen Oxides (pphm) Slide The Demand for Clean Air  Findings  Amount people are willing to pay for clean air increases substantially as pollution increases.  Higher income earners are willing to pay more (the gap between the demand curves widen)  National Academy of Sciences found that a 10% reduction in auto emissions yielded a benefit of $2 billion---somewhat greater than the cost. Chapter 18 Slide Private Preferences for Public Goods  Government production of a public good is advantageous because the government can assess taxes or fees to pay for it.  Determining how much of a public good to provide when free riders exist is difficult. Chapter 18 Slide Determining the Level of Educational Spending Willingness to pay $ The efficient level of educational spending is determined by summing the willingness to pay for education for each of three citizens. AW W1 $0 $600 Telemark University College Department of Electrical Engineering, Information Technology and Cybernetics Faculty of Technology, Postboks 203, Kjølnes ring 56, N-3901 Porsgrunn, Norway. Tel: +47 35 57 50 00 Fax: +47 35 57 54 01 Introduction to Visual Studio and C# HANS-PETTER HALVORSEN, 2012.08.17 2 Table of Contents 1 Introduction 5 1.1 Visual Studio 5 1.2 C# . 6 1.3 .NET Framework 6 1.4 Object-Oriented Programming (OOP) . 7 2 Visual Studio . 8 2.1 Introduction . Introduction to Environmental Protection and Negative Externalities Introduction to Environmental Protection and Negative Externalities By: OpenStaxCollege Environmental Debate Across the country, countless people have protested, even risking arrest, against the Keystone XL Pipeline (Credit: modification of image by “NoKXL”/Flickr Creative Commons) Keystone XL You might have heard about Keystone XL in the news It is a pipeline system designed to bring oil from Canada to the refineries near the Gulf of Mexico, as well as to boost crude oil production in the United States While a private company, TransCanada, will own the pipeline, U.S government approval is required because of its size and location The pipeline is being built in four phases, with the first two currently in operation, bringing oil from Alberta, Canada, east across Canada, south through the United States into Nebraska and Oklahoma, and northeast again to Illinois The third and fourth phases 1/3 Introduction to Environmental Protection and Negative Externalities of the project, known as Keystone XL, would create a pipeline southeast from Alberta straight to Nebraska, and then from Oklahoma to the Gulf of Mexico Sounds like a great idea, right? A pipeline that would move much needed crude oil to the Gulf refineries would increase oil production for manufacturing needs, reduce price pressure at the gas pump, and increase overall economic growth Supporters argue that the pipeline is one of the safest pipelines built yet, and would reduce America’s dependence on politically vulnerable Middle Eastern oil imports Not so fast, say its critics The Keystone XL would be constructed over an enormous aquifer (one of the largest in the world) in the Midwest, and through an environmentally fragile area in Nebraska, causing great concern among environmentalists about possible destruction to the natural surroundings They argue that leaks could taint valuable water sources and construction of the pipeline could disrupt and even harm indigenous species Environmentalist groups have fought government approval of the proposed construction of the pipeline, and as of press time the pipeline projects remain stalled Of course, environmental concerns matter when discussing issues related to economic growth But how much should they factor in? In the case of the pipeline, how we know how much damage it would cause when we not know how to put a value on the environment? Would the benefits of the pipeline outweigh the opportunity cost? The issue of how to balance economic progress with unintended effects on our planet is the subject of this chapter Introduction to Environmental Protection and Negative .. .Introduction to Positive Externalities and Public Goods it is expected to send data and images back to earth until 2025 Such a technological feat has a lot to with economic principles... economists refer to as a public good This leads us to the topic of this chapter—technology, positive externalities, public goods, and the role of government in the encouragement of innovation and the... between fetching water in buckets and indoor plumbing, and between infection and good health from antibiotics 2/3 Introduction to Positive Externalities and Public Goods In December 2009, ABC News