2)Basic concepts and key points a)Basic concepts:externality;positive externality;negative externality; b)Key points:the definition of externality:not reflected in the market price: four characteristics of externality:social losses or benefits brought by externality:. 3)Questions and application How to measure people's marginal willingness-to-pay for pollution elimination Section 2 Private Response 1)Main Content a)Bargaining and the Coase Theorem b)Mergers. c)Social conventions 2)Basic concepts and key points a)Basic concepts:Coase theorem;internalization; b)Key points:The content and application scope of Coase theorem:other private countermeasures to solve externalities;merger and social conventions 3)Questions and application Analyze the reasons for the failure of private responses to externality Section 3 Public Responses to Externality:Taxes and Subsidies 1)Main Content a)taxes b)subsidies. 2)Basic concepts and key points a)Basic concepts:Pigouvian Tax; b)Key points:The amount of Pigouvian tax revenue,the scale and problems of subsidles 3)Questions and application Do the distributional consequences differ between the tax and subsidy schemes? Section 4 Public Responses to Externality:Emissions Fee and Cap-and -Trade Programs 1)Main Content a)emissions fee 2) Basic concepts and key points a) Basic concepts: externality; positive externality; negative externality; b) Key points: the definition of externality: not reflected in the market price; four characteristics of externality; social losses or benefits brought by externality;. 3) Questions and application How to measure people's marginal willingness-to-pay for pollution elimination ? Section 2 Private Response 1)Main Content a) Bargaining and the Coase Theorem b) Mergers. c) Social conventions 2) Basic concepts and key points a) Basic concepts: Coase theorem; internalization; b) Key points: The content and application scope of Coase theorem; other private countermeasures to solve externalities; merger and social conventions 3) Questions and application Analyze the reasons for the failure of private responses to externality Section 3 Public Responses to Externality: Taxes and Subsidies 1) Main Content a) taxes b) subsidies. 2) Basic concepts and key points a) Basic concepts: Pigouvian Tax; b) Key points: The amount of Pigouvian tax revenue, the scale and problems of subsidIes 3) Questions and application Do the distributional consequences differ between the tax and subsidy schemes? Section 4 Public Responses to Externality: Emissions Fee and Cap-and -Trade Programs 1) Main Content a) emissions fee