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Yangtze river scholars Distinguished Professor Biliang Luo Gave Lecture on Schumpeter Innovation Forum:Analysis of externalities, Producibility and Its Tradability

On March 28, Professor Luo Biliang was invited to guest the twenty-first Schumpeter Innovation Forum by our college, who is the doctoral tutor in the South China Agricultural University School of Economic Management institute. And he was awarded the title "Yangtze River scholar" by the Ministry of Education, and the "Pearl River Scholar" in Guangdong Province. This vivid academic report's theme is about "externalities, product and its tradable issues", which is hosted by Professor Pan Zhen. Nearly 200 teachers and students attend the academic report.

The Professor Luo Biliang was selected as the "China outstanding humanities and social scientists (economics)" in 2011, and made an innovative contribution in the ecological economy, regional economy, institutional economy and rural economic organizations and other fields. Also he won the title of the outstanding young social scientists ,the provincial academic leaders of the ideological and theoretical front "ten hundred thousand project" in the Guangdong Province, and the one of ten outstanding young people in Guangzhou, and the Technology Award of Youth Science in the seventh session of the Chinese Society, and the third Guangdong Youth May Fourth Medal and so on. What's more, he also enjoys the State Council "Government Special Allowance". He has published more than 100 academic papers, with "Institutional Logic of Economic Organization" (2000), "China's Agricultural Sustainable Development Trend, Mechanism and Countermeasures" (2000), "Towards Ecological Management" (2001) , "China's Agricultural Industry Organizations: Evolution, Comparison and Innovation" (2002), "Property Rights and Economic Organizations" (2003), " The Innovation and Performance of the Rural Economic Organization ------New Analysis of Institutional Economics" (2003), "New Institutional Economics" (2005) and other academic monographs.

Professor Luo started with the discussion of hot topics such as "industrial policy", "for government" and "limited government", and explained the problem of "in what circumstances the government needs to play its role" in detail at the meeting. Professor Luo's report is divided into two parts. The first part discusses the deal of the externality combined with the development of the Cooper tradition to the Coase theorem. The second part refers to several lively and interesting cases that explain the tradability problem.

First of all, Professor Luo used the case of cattle and wheat to analyze the Pigou tradition. He pointed out that when the market balance is destroyed by the externalities, government intervention should be introduced, and external producers should be punished to compensate for external victims. However, there is an unexplained question in the Pigou tradition weather it is correct to restrict the development of the other party in order to avoid damage to the other party? And this produced the view of Coase. Coase believes that no matter which side suffered damage, the key is to avoid more serious damage, considering the overall effect. Professor Luo suggested that Coase's view is the general paradigm of economics which is to ensure that the total cost of the minimization and maximize the total income. At the same time, Professor Luo also pointed out that the main problem of Coase paradigm lies in the definition of property rights, once the property rights can be defined, the market will be able to operate their own, external issues can also be internalized. However, in the case of environmental pollution, the subject is not clear, as the environment is public goods, but also produce external problems.  How to define their property rights at this point? In this regard, Professor Luo pointed out a common problem in contemporary society: people's expectations will always exceed the market supply, which will lead to people’s complaints about the market, and people will always think of government intervention in the case of market failure. However, Professor Luo argues that a more effective way is not government intervention, but to make the items become tradable.

Then, Professor Luo make an in-depth analysis for the issue "why high-end real estate has a better environment than ordinary communities," Professor Luo pointed out that the environment should have been public goods, however, in this issue, the environment has become tradable. In fact, the payment of house prices actually contains the payment of the environment. Therefore, Professor Luo puts forward his point of view: external issues do not have to rely entirely on the government , the market can also solve the external problems. He also vividly illustrates the fact that non-tradable items can also be traded in another environment, and external acts can also be internalized.

Professor Luo’s lecture includes full theoretical, vivid and exciting case,teachers and students have said that they are highly inspired, benefited in the lecture. Finally, the report makes a successful conclusion in warm applause.