MSC = MRS + MONTH, where MSC - limit public costs (marginal social cost); MRS - limit private costs (marginal private cost); MONTH - limit external costs (marginal external cost).
Pilot studies showed that Kouz's theorem is right for limited number of participants of the transaction (two-three). At increase of number of participants costs and the prerequisite about their zero value sharply increase stops being the correct.
MSB = MRV + MEV, where MSB - limit public benefits (marginal social benefit); MRV - limit private benefits (marginal private benefit); MEV - limit external benefits (marginal external benefit).
The market as the certain mechanism of distribution and use of limited resources based not on coercion and orders (as in rigidly centralized economic systems, and on a voluntary exchange, has a number of advantages.
It is necessary to highlight that in market economy there is no production for the sake of production. In the center of the market there is a consumer, production is constantly focused on it. The main objective of any povaroproizvoditel - to find in the market of the consumer of the production, to sell it goods. From that, this problem is how successfully solved, finally welfare of the producer therefore the consumer, using the money which is at his disposal depends, has finally the defining impact that is made and where there are made goods.
Using the last achievements of science and ekhnik, the producer receives though temporary, but powerful advantages in competitive fight due to decrease in individual costs and receiving a quasirent. Thus, the market mechanism creates constantly operating incentives for production efficiency increase.
Most effectively the market mekhanizmosushchestvlyat the functions in the conditions of economic freedom which means freedom of enterprise, freedom of movement of resources on different scopes of application, a freedom of choice of sellers and buyers, freedom of pricing. It means that important advantage of market economy is that is self-regulating system.
At last, obviously, the main advantage of market system is that it not the some speculative scheme which is artificially designed and violently introduced. The market which arose some tysyachaletiya back developed in the natural way, passed a difficult way of development, changing, adapting to the changing conditions and by that proved the viability.
The correcting subsidy (corrective subsidy) is a subsidy to producers or consumers of the economic benefits, positive outer effects which to approach limit private benefits to the limit public.
Secondly, Kouz's theorem opens economic sense of the property rights. Their accurate distribution among economic entities conducts to that all results of activity the subject concern only it therefore any outer effects turn into the internal. Therefore the main function of the property rights consists in giving incentives for bigger internalization of eksternaliya. Accurate distribution of the property rights conducts to minimization of external effket.
In a case with training the correcting subsidy equal to external benefits (S = ME, could be provided to that would increase their demand for services of educational institutions to level, at which MSB = MSC.
Outer effects share on negative and positive. Negative effects are connected with costs, positive - with benefits for the third parties. Thus, outer effects a difference between social costs (benefits) and private costs (benefits):
Bigger flexibility the payment for emissions possesses. The payment for emissions is the payment raised from firm for each unit of the emissions polluting environment. Such system promotes reduction of total amount of harmful emissions to what experience of its application in Germany visually testifies. However the full confidence that standards of pollution will not be violated, at such system is not present.