levo
Get notified

Market Failure Across the Economy

Environmental externalities and environmental change

  • 3 things to know
  • Papers 1 and 3

Overview

Environmental externalities from road transport, the atmosphere as a common resource and the tragedy of the commons, climate change as a global externality, undervalued future damage, overfishing, the consequences of environmental change for businesses and agriculture, regulation as a business opportunity, the polluter pays principle, landfill tax, valuing damage, growth against the environment, and greenwashing.

What you need to know

Answer each one before you reveal it.

Your recallNot started
Key term

Give three examples of environmental externalities from road transport.

Key term

Why is climate change described as a global externality?

Key term

How does overfishing illustrate market failure?

Questions from this subtopic

Each one with the model answer underneath.

  1. 1

    Give three examples of environmental externalities from road transport.

    Model answer

    Air pollution, noise and congestion imposed on other road users.

  2. 2

    Why is the atmosphere treated as a common resource, and why does that matter?

    Model answer

    Nobody owns it and nobody can be excluded from using it, so no individual polluter has any incentive to limit the damage it does.

  3. 3

    What is the tragedy of the commons?

    Model answer

    The tragedy of the commons is the over-use and degradation of a resource open to all, because each user gains the whole benefit of using more while the cost is shared by everyone.

  4. 4

    Why is climate change described as a global externality?

    Model answer

    Emissions anywhere affect the climate everywhere, so much of the cost falls on people in other countries and on future generations.

  5. 5

    Why do markets undervalue environmental damage that will occur far in the future?

    Model answer

    Future costs are discounted heavily and fall on people who are not parties to today's transactions, so they carry no weight in today's price.

  6. 6

    How does overfishing illustrate market failure?

    Model answer

    Each boat gains the full value of its catch while the loss of the stock is shared, so the fishery is fished well beyond the level that could be sustained.

See the rest and revise

Other ways to work this

The same content, four other ways.

What is inside Levo

Six ways to work the same material.

1Closed book
2Open book
3Closed book

See a huge jump in your memorisation

Answer cold, learn it, then prove it stuck. Levo tracks the jump between your first attempt and your last.

Scarcity, Choice and Potential Conflicts
Enterprise, Business and the Economy
Introducing the Market
The Role of Credit in the Economy

Cram a whole paper in one sitting

Sort every topic into what you know and what you do not, then drill only the weak ones.

Brazil, , India and China.
RussiaMexicoIndonesia

Blank Blitz consolidates the facts

Rapid timed gap-fills on the terms and numbers you need to recall without thinking.

ABorrowing becomes dearer and saving more rewarding.
BMortgage holders have less disposable income left.
CSpending on credit-financed items falls.

Build It trains answer structure

Assemble a full-mark answer from its marking points, in the order an examiner wants them.

Wage rate means the amount an employer pays for one hour of work.
TrueFalse

Test It catches misconceptions

Spot the fault in a statement. The traps are the mistakes students actually make.

721941163128510

Brain Breaks between sessions

Short focus games to reset attention, so the next set lands better than the last.

Every question in Market Failure Across the Economy, on a schedule.

Attempt a question from memory, write the correct version, then attempt it again. Levo records the jump between your first attempt and your last, and brings each question back on the day you are due to forget it.

Start revising, £5 a monthSee how the method works

Or £46 a year, about £3.83 a month. Cancel anytime.