Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.
Externalities is a cost or benefit nottransmitted trough prices ,it is the outside the Market Mechanism .
   Externalities are created when social costs and    benefits differ from private costs and benefits .
   Market prices and profits can be misleading as    they are not the true value prices and profits to    the society .
   Market putting wrong signals leading a    Misallocation of resources.
  External costs of productionBy driving a car consumers increase the amountof pollution.
 External benefits of consumptionBy listening to music ,the pleasure can be private(only for a person or specific group o...
  For example consumption , consumer can   create externalities like :-pollution from cars and Motorbikes-Litter on stree...
  Positive externalities create mostly benefits ,ex:-research and development -> governmentintervention (subsidize it )-e...
   Moral codes and social sanctions   Voluntary organization   Internalization (when activities with    complementary e...
   http://tutor2u.net/economics/content/topics    /externalities/what_are_externalities.htm   http://users.hunterlink.ne...
Upcoming SlideShare
Loading in …5
×

Externalities

1,081 views

Published on

Published in: Economy & Finance, Business
  • Be the first to comment

  • Be the first to like this

Externalities

  1. 1. Externalities is a cost or benefit nottransmitted trough prices ,it is the outside the Market Mechanism .
  2. 2.  Externalities are created when social costs and benefits differ from private costs and benefits .
  3. 3.  Market prices and profits can be misleading as they are not the true value prices and profits to the society .
  4. 4.  Market putting wrong signals leading a Misallocation of resources.
  5. 5.  External costs of productionBy driving a car consumers increase the amountof pollution.
  6. 6.  External benefits of consumptionBy listening to music ,the pleasure can be private(only for a person or specific group of people )and also can be social (provideenjoyment/entertainment to the others aroundyou )
  7. 7.  For example consumption , consumer can create externalities like :-pollution from cars and Motorbikes-Litter on streets and in public places-Vandalism of public property
  8. 8.  Positive externalities create mostly benefits ,ex:-research and development -> governmentintervention (subsidize it )-education (consumption) -> social benefit isgreater than private benefit
  9. 9.  Moral codes and social sanctions Voluntary organization Internalization (when activities with complementary externalities are merged into one firm ,thus eliminating the externality ) Contracts –Parties through negotiation can agree as to how to regulate the externality .
  10. 10.  http://tutor2u.net/economics/content/topics /externalities/what_are_externalities.htm http://users.hunterlink.net.au/~ddhrg/econ/ ext1.html http://www.econlib.org/library/Enc/Externa lities.html Etc.

×