What is an externality? Please briefly illustrate with an example (a made-up example is OK). A political science colleague of the instructor's liked to point out to students that environmental laws were essentially about regulating externalities, and need to be understood as such. Is she correct?

describes how the law requires the Environmental Protection Agency (the EPA) to establish national ambient air quality standards for certain pollutants In fact, costs are not referenced in the legislation. Critics of the Clean Air Act argue that costs and cost-benefit analysis should always be taken into account by the EPA and balanced against other factors when establishing air quality standards. Do you agree with the critics? Why or why not.

Under the Superfund law, the EPA can recover clean-up costs for a Suprefund site from (i) the generator who deposited the wastes, (ii) the transporter of the wastes to the site, (iii) the owner of the site at the time of the disposal, and (iv) the current owner and operator of the site. Is this the right approach? Why or why not? Does it hold liable innocent parties that are essentially blameless -- for example, someone who bought a piece of property unaware that illegal toxic dumping had occurred there in the past?