Vocabulary
What is regulation?
The establishment, by the government, of rules aimed at influencing the behavior of firms and individuals. Regulation can involve setting prices, establishing product and workplace standards, and limiting entry into an industry.
What is a merger?
The combining of two or more separately owned firms into a single firm
What is the poverty rate?
The percentage of the population that has a family income below a government-defined threshold, or poverty line
What is a cash transfer?
a direct payment of cash by the government to an individual
what is a public provision?
the supplying of a good or service by the government; examples include the services provided by publicly supported schools and universities
What is deregulation
The process of removing government restrictions on firms in order to promote competition or encourage economic activity
What is a government failure?
Inefficient allocation of resources caused by government intervention in the economy
What is logrolling?
a practice in which law-makers agree to vote for each other’s legislation
What is a corrective tax?
a tax on producers that is designed to reduce negative externalities, such as pollution
What is a means tested program?
a government benefit that is tied to family income so that benefits are reduced as income rises; examples include food stamps and welfare payments
What is regulatory capture
a situation in which a regulatory agency is dominated, or captured, by the industry it regulates; a captured agency tends to favor the industry it is meant to regulate more than the public interest
A resource that everyone has access to and that can easily be overused or destroyed. Examples include the atmosphere and the oceans.
Wildcard: What is bidrigging?
an illegal, anticompetitive practice in which two or more firms agree in advance which one will submit the lowest bid for a contract offered through a competitive bidding process
What is the earned income tax credit?
a tax reduction given to low-wage workers when they file their federal income tax forms; its goal is to raise the incomes of poor people without discouraging them from working
What is market division?
an illegal, anticompetitive practice in which two or more firms agree to divide a market among themselves, selling only to certain customers or in certain geographic areas
What is eminent domain?
The power of a government to take an individual’s property for public use if the owner is fairly compensated
What is cap n trade?
a policy that limits the amount of pollution a firm may legally emit each year but allows firms to trade with each other to obtain additional pollution permits
a policy approach—often applied to environmental policy—that relies on rules and enforcement, rather than market incentives, to influence behavior
What is an in kind transfer?
a government benefit in the form of goods or vouchers, such as food stamps and public housing
What is the takings clause?
a clause of the Fifth Amendment to the Constitution stating that the government must pay private owners when their property is taken for public use under the power of eminent domain
What is a regualatory agency?
A unit of government created to set and enforce standards for a particular industry or area of economic activity
What is income redistribution?
a policy designed to reduce income inequality by taking money from the rich and distributing it to the poor
What is a tragedy of the commons?
a circumstance in which a shared resource is overused or destroyed because users take no responsibility for its preservation
What are market based policies?
a policy approach—often applied to environmental policy—that relies on market incentives, rather than regulation, to influence behavior
What is a quintile?
any one of the five groups of a population that has been divided into fifths for the purpose of data analysis; for example, the top quintile of a country’s population in terms of income represents the top fifth of all earners