1. Chapter Twelve: The Economics of the Environment

2. The Theory of Externalities

3. Figure 12.1: The Negative Externalities of T-Shirt Production

4. Figure 12.2: Internalizing a Negative Externality with a Pigovian Tax

5. Figure 12.3: Analysis of a Positive Externality

6. Figure 12.4: Environmental Taxes in Select Developed Countries, as a Percent of Total Tax Revenue, 2010 Source: Organisation for Economic Co-operation and Development, OECD/EEA database on instruments used for environmental policy and natural resources management. Updated April 13, 2012.

7. Environmental Policies in Practice

8. Figure 12.5: A Firm’s Response to a Pollution Tax

9. Figure 12.6: Gasoline Prices and Consumption, Select Countries, 2010 Sources: GIZ, International Fuel Prices 2010/2011, 7th ed. Federal Ministry for Economic Cooperation and Development (Germany), 2011; U.S. Energy Information Administration online database.

10. Appendix: Formal Analysis of Negative Externalities

11. Figure 12.7: Welfare Analysis of a Negative Externality, without a Pigovian Tax

12. Figure 12.8: Welfare Analysis of a Negative Externality, with a Pigovian Tax