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Logrolling is the trading of favors, or quid pro quo, such as vote trading by legislative members to obtain passage of actions of interest to each legislative member. In organizational analysis, it refers to a practice in which different organizations promote each other's agendas, each in the expectation that the other will reciprocate. In an academic context, the Nuttall Encyclopedia describes logrolling as "mutual praise by authors of each other's work". Where intricate tactics or strategy are involved, the process may be called horse trading.
Ronald Harry Coase was a British economist and author. Coase was educated at the London School of Economics, where he was a member of the faculty until 1951. He was the Clifton R. Musser Professor of Economics at the University of Chicago Law School, where he arrived in 1964 and remained for the rest of his life. He received the Nobel Memorial Prize in Economic Sciences in 1991.
Emissions trading is a market-oriented approach to controlling pollution by providing economic incentives for reducing the emissions of pollutants. The concept is also known as cap and trade (CAT) or emissions trading scheme (ETS). One prominent example is carbon emission trading for CO2 and other greenhouse gases which is a tool for climate change mitigation. Other schemes include sulfur dioxide and other pollutants.
In welfare economics, a Pareto improvement formalizes the idea of an outcome being "better in every possible way". A change is called a Pareto improvement if it leaves everyone in a society better-off. A situation is called Pareto efficient or Pareto optimal if all possible Pareto improvements have already been made; in other words, there are no longer any ways left to make one person better-off, without making some other person worse-off.
Environmental economics is a sub-field of economics concerned with environmental issues. It has become a widely studied subject due to growing environmental concerns in the twenty-first century. Environmental economics "undertakes theoretical or empirical studies of the economic effects of national or local environmental policies around the world. ... Particular issues include the costs and benefits of alternative environmental policies to deal with air pollution, water quality, toxic substances, solid waste, and global warming."
In economics, an externality or external cost is an indirect cost or benefit to an uninvolved third party that arises as an effect of another party's activity. Externalities can be considered as unpriced components that are involved in either consumer or producer market transactions. Air pollution from motor vehicles is one example. The cost of air pollution to society is not paid by either the producers or users of motorized transport to the rest of society. Water pollution from mills and factories is another example. All (water) consumers are made worse off by pollution but are not compensated by the market for this damage. A positive externality is when an individual's consumption in a market increases the well-being of others, but the individual does not charge the third party for the benefit. The third party is essentially getting a free product. An example of this might be the apartment above a bakery receiving some free heat in winter. The people who live in the apartment do not compensate the bakery for this benefit.
In neoclassical economics, market failure is a situation in which the allocation of goods and services by a free market is not Pareto efficient, often leading to a net loss of economic value. The first known use of the term by economists was in 1958, but the concept has been traced back to the Victorian philosopher Henry Sidgwick. Market failures are often associated with public goods, time-inconsistent preferences, information asymmetries, non-competitive markets, principal–agent problems, or externalities.
A Kaldor–Hicks improvement, named for Nicholas Kaldor and John Hicks, is an economic re-allocation of resources among people that captures some of the intuitive appeal of a Pareto improvement, but has less stringent criteria and is hence applicable to more circumstances. A re-allocation is a Kaldor–Hicks improvement if those that are made better off could hypothetically compensate those that are made worse off and lead to a Pareto-improving outcome. The compensation does not actually have to occur and thus, a Kaldor–Hicks improvement can in fact leave some people worse off.
In law and economics, the Coase theorem describes the economic efficiency of an economic allocation or outcome in the presence of externalities. The theorem is significant because, if true, the conclusion is that it is possible for private individuals to make choices that can solve the problem of market externalities. The theorem states that if the provision of a good or service results in an externality and trade in that good or service is possible, then bargaining will lead to a Pareto efficient outcome regardless of the initial allocation of property. A key condition for this outcome is that there are sufficiently low transaction costs in the bargaining and exchange process. This 'theorem' is commonly attributed to Nobel Prize laureate Ronald Coase.
A Pigouvian tax is a tax on any market activity that generates negative externalities. A Pigouvian tax is a method that tries to internalize negative externalities to achieve the Nash equilibrium and optimal Pareto efficiency. The tax is normally set by the government to correct an undesirable or inefficient market outcome and does so by being set equal to the external marginal cost of the negative externalities. In the presence of negative externalities, social cost includes private cost and external cost caused by negative externalities. This means the social cost of a market activity is not covered by the private cost of the activity. In such a case, the market outcome is not efficient and may lead to over-consumption of the product. Often-cited examples of negative externalities are environmental pollution and increased public healthcare costs associated with tobacco and sugary drink consumption.
Free-market environmentalism argues that the free market, property rights, and tort law provide the best means of preserving the environment, internalizing pollution costs, and conserving resources.
Social cost in neoclassical economics is the sum of the private costs resulting from a transaction and the costs imposed on the consumers as a consequence of being exposed to the transaction for which they are not compensated or charged. In other words, it is the sum of private and external costs. This might be applied to any number of economic problems: for example, social cost of carbon has been explored to better understand the costs of carbon emissions for proposed economic solutions such as a carbon tax.
Allocative efficiency is a state of the economy in which production is aligned with the preferences of consumers and producers; in particular, the set of outputs is chosen so as to maximize the social welfare of society. This is achieved if every produced good or service has a marginal benefit equal to the marginal cost of production.
Harold Demsetz was an American professor of economics at the University of California at Los Angeles (UCLA).
"The Problem of Social Cost" (1960) is a law review article by Ronald Coase, then a faculty member at the University of Virginia, dealing with the economic problem of externalities. It draws from a number of English legal cases and statutes to illustrate Coase's belief that legal rules are only justified by reference to a cost–benefit analysis, and that nuisances that are often regarded as being the fault of one party are more symmetric conflicts between the interests of the two parties. If there are sufficiently low costs of doing a transaction, legal rules would be irrelevant to the maximization of production. Because in the real world there are costs of bargaining and information gathering, legal rules are justified to the extent of their ability to allocate rights to the most efficient right-bearer.
In economics, a spillover is a positive or a negative, but more often negative, impact experienced in one region or across the world due to an independent event occurring from an unrelated environment.
Public economics(or economics of the public sector) is the study of government policy through the lens of economic efficiency and equity. Public economics builds on the theory of welfare economics and is ultimately used as a tool to improve social welfare. Welfare can be defined in terms of well-being, prosperity, and overall state of being.
The marginal cost of public funds (MCF) is a concept in public finance which measures the loss incurred by society in raising less revenues to finance government spending due to the distortion of resource allocation caused by taxation. Formally, it is defined as the ratio of the marginal value of a monetary unit raised by the government and the value of that marginal private monetary unit. The applications of the marginal cost of public funds include the Samuelson condition for the optimal provision of public goods and the optimal corrective taxation of externalities in public economic theory, the determination of tax-smoothing policy rules in normative public debt analysis and social cost-benefit analysis common in practical policy analysis.
David Zilberman is an Israeli-American agricultural economist, professor and Robinson Chair in the Department of Agricultural and Resource Economics at the University of California, Berkeley. Zilberman has been a professor in the Agricultural and Resource Economics Department at UC Berkeley since 1979. His research has covered a range of fields including the economics of production technology and risk in agriculture, agricultural and environmental policy, marketing and more recently the economics of climate change, biofuel and biotechnology. He won the 2019 Wolf Prize in Agriculture, he is a member of the US National Academy Science since 2019, was the President of the Agricultural and Applied Economics Association (AAEA), and is a Fellow of the AAEA, Association of Environmental and Resource Economics, and the European Association of Environmental and Resource Economics. David is an avid blogger on the Berkeley Blog and a life-long Golden State Warriors fan.
Quadratic voting is a rated voting method procedure where voters express the degree of their preferences. By doing so, quadratic voting seeks to address issues of the Condorcet paradox and tyranny of the majority. Quadratic voting works by allowing users to "pay" for additional votes on a given outcome to express their support for given issues more strongly, resulting in voting outcomes that are aligned with the highest willingness to pay outcome, rather than just the outcome preferred by the majority regardless of the intensity of individual preferences. The payment for votes may be through either artificial or real currencies. Quadratic voting is a variant of cumulative voting, but requires that to vote multiple times for an option, the square of the amount of votes you cast for that option must be spent from the available pool of credits.
References
- ↑ Coase, Ronald (1960). "The Problem of Social Cost". Journal of Law and Economics. 3: 1–44. doi:10.1086/466560. S2CID 222331226.
- ↑ Pigou, Arthur (2016). The Economics of Welfare. London: Wentworth. ISBN 978-1361970485.
- ↑ Anderson, David A. (2019). Environmental economics and natural resource management (Fifth ed.). Abingdon, Oxon. ISBN 9781351121477. OCLC 1055566815.
{{cite book}}: CS1 maint: location missing publisher (link) - ↑ Anderson, David A. (2020). "Environmental Exigencies and the Efficient Voter Rule". Economies. 8 (4): 7. doi: 10.3390/economies8040100 . hdl: 10419/257149 .
- ↑ Anderson, David A. (2011). "A Voting Approach to Externality Problems" (PDF). Journal of Economic and Social Policy. 14: 10. S2CID 55775170. Archived from the original (PDF) on 2019-02-24.
- ↑ Anderson, David A. (2020). "Environmental Exigencies and the Efficient Voter Rule". Economies. 8 (4): 7. doi: 10.3390/economies8040100 . hdl: 10419/257149 .
- Anderson, David A., 2019, Environmental Economics and Natural Resource Management, New York: Routledge.
- Anderson, David A., 2020, "Environmental Exigencies and the Efficient Voter Rule," Economies: Vol. 8: Iss. 4.
- Anderson, David A., 2011, "A Voting Approach to Externality Problems," Journal of Economic and Social Policy: Vol. 14: Iss. 1, Article 4.
- Coase, Ronald H., 1960, “The Problem of Social Cost,” Journal of Law and Economics, 3, 1-44.
- Pigou, Arthur C., 1932, The Economics of Welfare, London: Wentworth.
Further reading
- Anderson, David A., 2025, Environmental Economics and Natural Resource Management 6e, New York: Routledge.
- Battaglini, M., Morton, R., and Palfrey, T. R., 2007, “Efficiency, Equity and Timing in Voting Mechanisms,” American Political Science Review, 101:3, 409–424.
- Bell, J., Huber, J., Viscusi, W. K., 2009, “Voter-Weighted Environmental Preferences,” Journal of Policy Analysis and Management, 28:4, 655–671.
- Buchanan, J. M., Tullock, G., 1962, The Calculus of Consent: Logical Foundations of Constitutional Democracy, Ann Arbor: University of Michigan Press.
- Clarke, E. H., 1980, Demand Revelation and the Provision of Public Goods, Cambridge, Mass.: Harper & Rowe, Ballinger.
- Dougherty, K. L., Edward, J., 2005, “A Nonequilibrium Analysis of Unanimity Rule, Majority Rule, and Pareto,” Economic Inquiry, 43:4, 855–864.
- Jones, L., Manuelli, R. 2001, “Endogenous Policy Choice: The Case of Pollution and Growth,” Review of Economic Dynamics, 4:2, 369–405.
- Mueller, Dennis C., 2003, Public Choice III, New York: Cambridge University Press.
- Riker, W. H., Brams, S. J., 1973, “The Paradox of Vote Trading,” American Political Science Review, 67, 1235–1247.
- Uslaner, E. M., Davis, J. R., 1975, “The Paradox of Vote Trading: Effects of Decision Rules and Voting Strategies on Externalities,” American Political Science Review, 69:3, 929–942.
- Walker, J. M., Gardner, R., Herr, A., and Ostrom, E., 2000, “Collective Choice in the Commons: Experimental Results on Proposed Allocation Rules and Votes,” Economic Journal, 110, 212–234.
- Wittman, D., 1989, “Why Democracies Produce Efficient Results,” Journal of Political Economy, 97:6, 1395–1424.