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1. In the last decade, ridesharing apps like Uber and Lyft have generated considerable debate among policy makers and politicians in major urban areas over
1. In the last decade, ridesharing apps like Uber and Lyft have generated considerable debate among policy makers and politicians in major urban areas over whether these services are on net harmful or beneficial. The debate has centered, in part, on the positive and negative externalities generated by these ride-sharing services. Discuss in detail one negative and one positive externality generated by these services. 2. From our reading this week, do you think government assignment and enforcement of property rights can internalize an externality? Will this approach work as well as, better than, or worse than direct government intervention? Explain your answers and describe one of the difficulties associated with this solution. 3. It's been observed that in close congressional votes, members of Congress often choose to remain \"undecided\" until the last moment. Why might they do this? What lesson does this example teach about a potential shortcoming of the Coasian solution to the externality problem? }t. Firms A and B each produce 80 units of pollution. The federal government wants to reduce pollution levels. The marginal costs associated with pollution reduction are MCA = 50 + 3QA for firm A and MCB = 20 + 6QB for firm B, where QA and QB are the quantities of pollution reduced by each firm. Society's marginal benefit from pollution reduction is given by MB = 620 3QT, where QT is the total reduction in pollution. a. What is the socially optimal level of each firm's pollution reduction? b. How much total pollution is there in the social optimum? c. Explain why it is inefficient to give each firm an equal number of pollution permits (if they are not allowed to trade them). d. Explain how the social optimum can be achieved if firms are given equal numbers of pollution permits but are allowed to trade them. e. Can the social optimum be achieved using a tax on pollution
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