Incentives external

Mandates have several justifications. Absent mandates, health plans may have an insufficient incentive to cover vaccines. Such coverage may not be demanded because individuals do not take account of the health and financial externalities in their purchase decisions (Summers 1989). Also, people may underestimate the probability of contracting various diseases (Jensen and Morrisey 1999). Vaccines are more likely to interfere with the spread of the disease than are drug treatments. As the probability of contracting a disease falls, fewer persons maybe expected to demand to be vaccinated for the disease. Also, market power of sellers of vaccines may be lower than for drug treatments. With drugs, persons who may benefit from the treatment are identifiable to sellers, thus allowing firms to extract consumer surplus... 

The second problem addressed by property rules involves appropriation, or more precisely, the inability to appropriate returns on common pool resources. Absent an appropriation tool, no single individual retains an economic incentive to invest in common pool resources. Few would purchase or maintain an automobile if they could not control its subsequent use. The market gardener cares for her trees in the spring in anticipation of a harvest in the autumn. Property rules permit a person (the "owner") to appropriate the fruits of their Investment. It is thought that society generally benefits when owners Invest in their property, particularly if duties are imposed to account for negative externalities like pollution. 

Increase accountability among the faculty. One of the barriers that we discussed was the lack of incentives for faculty members to assist with this transition any more than they do already. There are a lot of faculty members who do this very aggressively, but it is done more out of their own will and desire to help society s need for future scientists. There are limited, external faculty incentives to help with the transition. Also, there was an acknowledgment in our group discussion that professors were unlikely to change their practiced beliefs. We spent time focusing on what actions we could suggest or what actions could be taken to help influence their belief. 

Corporate human resources should ensure conformity in standards across the businesses - for example, in employee evaluation processes, incentive plans, benefit plans, and training pohcies. As in other functions, aU operational tasks should be outsourced or operated as shared services at SBU level - for example, payroll, human resources information systems, a database on internal job opportunities, or the administration of benefit plans. The center should be active in developing top talent across the businesses, and it should run the goldfish pool for internal top talent and the company s program for recmiting experienced persoimel. This responsibility also includes the early identification of skills needed by the entire organization, for example, e-commerce skills to kick-start new businesses. The center must also act as a repository of expertise on internal and external best practices in talent management... 

Subsidies are justified because a free market for health care services fails to address such issues as externalities and the distribution of health benefits across different income groups. Subsidies, however, often create other problems—including problems that are even more serious than those they were intended to solve. The common practice of restricting subsidies to publicly owned and operated facilities impairs competition in the market for health services. This loss of competition alters incentives in a way that often undermines efficiency, quality, and patient satisfaction. 

There may be little economic incentive for the polluter to reduce pollution. Emission charges, disposal fees, and environmental penalties (e.g., fines) may be too low. Market prices of raw materials and utilities seldom account for external costs low prices of inputs reduce the incentive to consume less. The situation can be worsened when governments subsidize raw materials or utilities prices. 

Market failure The failure of the market to include in the price of a good the costs or benefits of an externality (a harmful or beneficial side-effect that occurs in the production, consumption or distribution of a particular good). Often, government policies in the form of regulations (such as standards, bans and restrictions on input use) and incentive-based mechanisms (such as taxes, subsidies and marketable permits) are implemented as corrective measures (Henrichsmeyer and Witzke 58). 

Two recently developed classes of drug show promise, and these act by inhibiting the production of testosterone from cholesterol or its metabolism by the enzyme 5-cc-reductase. Attempts to control benign prostatic hyperplasia provided the incentive for the development of 5-a-reductase inhibitors. It has been known for some time that there is a genetic condition that is manifested by a deficiency of this enzyme. Men who have this gene defect have normal external genitalia but only a very small prostate and additionally, they do not develop acne or exhibit the typical male pattern of hair loss. All of these processes are under the control of 5- -reductase, which controls the conversion of testosterone to another steroid, dihydrotestosterone, and it is an imbalance in the ratio of these two steroids that leads to acne, male-pattern baldness, prostatic hyperplasia and probably prostatic cancer. Several... 

The nature of the instrument required to correct for this externality is also implicit in the comparison of conditions (9.2) and (9.4). In order for the incentives of the chemical firm to be aligned with those of the regulator, all that is required is that the instrument f be defined so that it equates the two. This implies the following instrument, which 1 have termed an accumulation tax . 

The underlying principle behind the operation of a market economy is that the market provides all the incentives to the participants to operate as efficiently and effectively as possible. However, this is not always the case a market can be imperfect and this is particularly so for the environment. Externalities (where the full costs of an operation are not included in the price of the goods or services) are often viewed as the most widespread cause of market failures in relation to the environment. In such situations market prices often do not reflect the full cost of the environmental resources. Such externalities can be either negative or positive. 

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