Environmental Policy Instruments

This lecture delves into the concept of external costs in production activities and how they can be integrated into economic analysis. The instructor introduces the framework of supply and demand, discussing environmental policy instruments and the implications of external costs on market equilibrium. By using the examples of strawberry production and steel industry, the lecture explores the effectiveness of different policy measures such as production caps, quotas, and emission trading systems. The discussion also touches upon the impact of these policy instruments on market dynamics, producer surpluses, consumer surpluses, and international competition.