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482 • GlossaryMonetary Fund) and to lend for long-term investment projects in developingcountries (World Bank).Cap and tradeCapital account A measure of inflows of investments to the nation by foreignersand outflows of investments by nationals to foreign countries.Carrying capacity Originally the maximum population of cattle that can be sustainedon a given area of rangeland. By extension the population of humans thatcan be sustained by a given ecosystem at a given level of consumption, with agiven technology.Catch-per-unit-effort hypothesis The assumption of a linear relationship betweeneffort, stock, and harvest.Circular flow The idea that since every expenditure by anyone is at the same timean equal receipt by someone else and receipts in turn become expenditures,money or exchange value flows in a circle. But physical factors and products donot flow in a circle.Closed system A system that imports and exports energy only; matter circulateswithin the system but does not flow through it. The Earth closely approximates aclosed system.Coase theorem States that in a perfectly competitive market allocative efficiencywill be achieved whether property rights are given to the polluter or the “pollutee.”All that is needed is that someone have the property rights and that transactioncosts are zero.Coevolutionary economics The study of the mutual adaptations of economy andenvironment. Economic activity induces changes in the environment, and changesin the environment in turn induce further changes in the economy in a continuingprocess of coevolution.Command-and-control regulation Flat prohibitions, quotas, or standards as opposedto monetary incentives that operate through prices or taxes.Comparative advantage See “absolute advantage.”Competitive market A market in which there are many small buyers and sellersof an identical product. “Many” means “enough that no single buyer or seller issufficiently large to affect the market price.” Since everyone treats price as a parameter(a given condition) rather than a variable (something one can change),this condition is sometimes called the parametric function of prices.Complementarity The opposite of substitutability—when goods or factors haveto be used together in fairly strict combination with each other rather than insteadof each other. Even substitutes have some degree of complementarity, unless theyare “perfect” substitutes, in which case they are for all practical purposes identicalgoods or factors.Comprehensive efficiency The ratio of services gained from manmade capitalstock to the services sacrificed from the natural capital stock.Conditional cooperatorsCongestibility Occurs when a basically nonrival asset is used so heavily that oneperson’s use begins to interfere with or lower the quality of service to other users(e.g., a crowded road or interference from another radio station in a crowded frequencyband).