1. Read the "Introduction and Summary" chapter (pages 1-6) of the 2000 report "Burdens and Benefits of Environmental Tax Reform: An Analysis of Distribution by Industry" by J. Andrew Hoerner, available from the Redefining Progress website.
   
   Summarize the principle of Environmental Tax Reform (ETR). What is the trend on ETR in Europe? According to the report, what are the two ways that revenues from environmental taxes can be "recycled?" What do the conclusions of the report say about the net tax impact of ETR on most industries in the United States?
   
   
2. An introduction to the theory of environmental externalities is presented in the 1995 report "Electricity Generation and Environmental Externalities: Case Studies" by the U.S. Energy Information Administration. Read Chapter 2 of the report (pages 5-10).
   
   What does the report indicate is "the single most critical requirement" for a market to produce an outcome that maximizes social welfare? Is this requirement likely to be met in the real world? Summarize at least one example of an externality presented in the report? What are some of the possible remedies to externalities discussed in the report? Finally, what are some of the externalities associated with electric power generation?