F3· Preview
Consumer and Producer Behavior — Coase Theorem and Carbon Markets
There are three ways to correct an externality. The Coase Theorem shows private bargaining can solve it when transaction costs are low; Pigouvian taxes internalize external costs through price signals (the UK sugar tax, fuel taxes); and cap-and-trade systems set quantity limits and let the market discover the efficient carbon price. This module teaches you to analyze energy companies through their carbon cost exposure and why the EU ETS carbon price is a key variable for European industrial stocks.
⏱ 17 minModule F3.9
// What you'll learn
- There are three ways to correct an externality.
- The Coase Theorem shows private bargaining can solve it when transaction costs are low; Pigouvian taxes internalize external costs through price signals (the UK sugar tax, fuel taxes); and cap-and-trade systems set quantity limits and let the market discover the efficient carbon price.
- This module teaches you to analyze energy companies through their carbon cost exposure and why the EU ETS carbon price is a key variable for European industrial stocks.
// Full access
Sign up free for full access