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Merit goods are those which the government feels that individuals will under-consume, and which ought to be subsidized or provided free at the point of service. They have positive externalities and are usually associated with healthcare, education, and libraries.

Command-and-control regulation is a type of government intervention that sets specific limits for pollution emissions and/or mandates the use of certain control technologies. Examples include requirements for scrubbers on power plants or limits on the amount of pollutants that can be emitted by vehicles.

Cap and trade is a market-based approach to controlling pollution that allows firms to buy and sell permits for emissions. The total amount of pollution is capped, and firms must hold enough permits to cover their emissions, giving them an incentive to reduce emissions. Examples include the European Union Emissions Trading Scheme (EU ETS) for carbon dioxide.

Pigovian taxes are taxes levied on activities that generate negative externalities to correct for market inefficiencies. The tax is set equal to the social cost of the negative externality, with the goal of reducing the production or consumption of the goods that cause the externality. Examples include carbon taxes on greenhouse gas emissions and tobacco taxes.

A non-rival good is one whose consumption by one person does not reduce its availability for others. These goods can be consumed by multiple people at the same time without interfering with each other’s consumption. Examples include a streetlight, a television broadcast, and knowledge from a public lecture.

A private good is both excludable and rivalrous. This means consumers who don't pay can be prevented from using it and consumption by one person does reduce its availability for others. Examples include a slice of pizza, a car, and a concert ticket.

Social cost is the total cost to society, including both private costs incurred by the producer and the external costs to those who are affected by the production. It's given by the equation $Social Cost = Private Cost + External Cost$. Examples where social costs are high include industries that produce significant pollution.

Demerit goods are considered unhealthy, or otherwise socially undesirable due to the negative externalities they create. Governments may impose taxes, regulations, or prohibitions on these goods. Examples include cigarettes, alcohol, and recreational drugs.

Externalities are costs or benefits that impact third parties who are not directly involved in the production or consumption of a good or service. They can be positive (benefits) or negative (costs). Examples of negative externalities include pollution and noise from a factory; positive externalities include the benefits of an educated workforce or a vaccinated population.

Externality internalization involves altering incentives so that the private costs or benefits of a decision maker align with the social costs or benefits. This can be achieved through policies such as taxes, subsidies, or regulation. An example is taxing polluters an amount equal to the negative externalities they impose on society.

An assurance contract is a mechanism where a provision of a public good begins once a threshold of potential users agree to contribute. It helps to solve the free-rider problem by ensuring enough contributions before provision. Examples include crowdfunding campaigns and pre-sale events for public projects.

The free-rider problem occurs when individuals receive benefits from a resource without contributing to its cost. It's common with non-excludable goods, leading to under-provision or depletion. Examples include people using a public park without paying taxes, or benefitting from public defense without contribution.

The Coase Theorem states that if property rights are well-defined and transaction costs are low, parties can negotiate solutions to externalities on their own, resulting in an efficient allocation of resources regardless of who holds the rights. An example includes neighbors negotiating the level of noise permissible from a party.

Rivalry in consumption describes a situation where one person's use of a good diminishes the amount available for others. A good that is rivalrous in consumption is one where simultaneous consumption by multiple people is not possible without affecting each other’s experience. Examples include eating a sandwich, wearing a pair of shoes, and driving a car.

Excludability is a property of a good whereby it is possible to prevent individuals from enjoying its benefits. An excludable good allows the provider to restrict access to those who do not pay. Examples include subscription-based services (Netflix), private swimming pools, and gated communities.

Common pool resources are resources that are accessible to all individuals but subject to depletion or degradation through overuse. They are non-excludable but rivalrous. Examples include fisheries, forests, and atmosphere.

Public Choice Theory applies economic analysis to political science, focusing on the behavior of public officials and voters. It examines how self-interest, incentives, and other economic factors influence political decision-making and policy. For example, it may analyze how the design of public sector institutions impacts the provision of public goods.

Market failure occurs when the market does not allocate resources efficiently on its own. Externalities, public goods, information asymmetries, and market power can all lead to market failure. Examples include the overuse of common resources or under-provision of public goods.

A public good is a product that is non-excludable and non-rivalrous. This means that no one can be prevented from accessing it and one person's use doesn't reduce availability to others. Examples include fresh air, national defense, and public parks.

A non-excludable good is one that, once provided, cannot easily exclude others from using or benefiting from it, regardless of whether they have paid for it. Examples include public fireworks displays, national defense, and broadcast television.