What are environmental externalities and how can externalities be externalized? How can subsidies and taxes be used to increase economic efficiency? What is the difference between a private optimum and a social optimum? What is welfare analysis? How is efficiency represented graphically? What do we mean by "optimal" pollution? Why shouldn’t pollution levels be zero? What is a Pigouvian tax? How does it relate to the issue of property rights? What is the Coase theorem? What are some of the limitations of the theory? What are transactions costs? How do transactions costs relate to efficiency? Does the assignment of property rights affect equity? What are the free rider and holdout effects?