Introduction To Externalities

Introduction to Externalities
INTRODUCTION
In this essay I will explain what externalities are, why they can be problematic, how they can be addressed, the role of government and the potential
effects of how governments choose to intervene, concluding that transaction costs are a major determinant of the best policy response to the issue of
externalities.
WHAT ARE EXTERNALITIES?
Connolly & Munro (1999) describe an externality as "an action by one agent which affects directly the well–being or production possibilities of
other agents, but is chosen without regard to those consequences". Externalities can be positive or negative. I'm living in oil–rich Bahrain, with irritants
such as pollution from oil production, smoke from sheesha pipes, traffic jams from ... Show more content on Helpwriting.net ...
However, transaction costs can be so high that they exceed the benefits to be gained by negotiating. The fisherman may decide he cannot afford a
lawyer to pursue the oil company (perhaps the legal rights are not clearly defined) and he may simply decide to fish elsewhere instead. Conversely, if
the site was near a popular tourist area and several large hotels were determined to protect their livelihood, it may not be feasible or profitable for the
oil company to pay them all off. None of the above outcomes would produce an optimum result and that is usually why governments must step in.
POLICY RESPONSES AVAILABLE TO GOVERNMENTS
* Taxation
A visual aid helps demonstrate the effects of taxation levied by governments on production of a good/service which creates negative externalities, in
order to better balance social and private marginal costs, termed 'Pigouvian tax', after the economist who first examined their use.
Figure 1 – Optimal taxes on externalities. Source: Connolly & Munro, 1999, p.79 Figure 5.5
As output increases, marginal costs also increase, whereas marginal benefits (MB) decrease. The oil company will produce oil up to the point at which
their private marginal cost (PMC) equals their private marginal benefit (QВ°). Oil production also creates a social marginal cost (SMC) for local
residents, which will be above the private cost. If the oil

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Monopoly Case Study
Chapter 15: Monopoly
Question 1: explain how the following industries practice price discrimination: movie theaters.
Different price is charge to different age range. Price is based to the buyers' age whether they are a student, adult or elderly, most adult receives
regular admission price while students and elderly receives discount, this is because students and elderly are less likely not able to afford the full–price
of a movie ticket as they may not have income. Thus, this pricing strategy is used among the movie theaters. Moreover, the price of the movie tickets
varies on the time of purchase, movie theater may charge less price in the morning/afternoon and charge more in the popular time such as evening or
Fridays.
Question 2: explain how the following industries practices price discrimination: airlines. ... Show more content on Helpwriting.net ...
(Hints: Graph the market failure and explain the problem. Then show how the government action will change the situation.) Without Government
Intervention The air pollution imposes a cost on people who breathe in the air because the increase in air pollution will affect the health of the people.In
the presence of the pollution, the social cost of the pollution exceeds the private cost.due to negative externality the social cost curve is above the
supply curve, in which the vertical distance between the curve of private cost and the social cost is the external cost.In the graph it can be seen that the
optimal quantity is smaller than the market quantity, where QMKT is the free–market and OOpt is the efficient output, Thus, there is a welfare loss(A,
B, C)
In order to improve economic efficiency, the government can consider imposing green tax on drivers and factories to reduce the pollution that is being
emitted. In the graph the supply curve(private cost) will shift to the left resulting in the market equilibrium equals to the social

Market Failure
Jordan AlexanderFebruary 14, 2012 Economics Essay – Market Failure 1. Markets fail when they under or over allocate resources of production or
consumption, relative to the best interests of society. Market failure occurs due to four main factors: the existence of externalities, asymmetric
information, the abuse of monopoly power, and inequalities and wealth and development. The existence of externalities means that the market
mechanism does not always work efficiently. Markets run on a mechanism that only takes into account the private benefit and cost for a good. Besides
the marginal private cost and marginal private benefit, there are the marginal social cost and marginal social benefit, which are external. As a result,...
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Advertising is used in order to increase demand for a merit good (shift the demand curve to the right). The increase in demand would mean that the
price would increase, and therefore, the quantity supplied will increase. Graph 5. If the good has very large positive externalities, the government
might decide to provide the good directly for free, as with public goods. In most places, primary school education is made free for all, and is
provided by the government. Another method is limiting its price to a certain amount, so that quantity supplied will be more than the market price.
This occurs with medical care in some places. Also, making the good free and then rationing it is a common solution, which is often done with
medical care for children or the elderly. Graph 6. Another option is for the government to offer subsidies to private consumers. Therefore, the supply
curve would shift to the right, lowering the price and increasing the quantity. This means that the government is relying on the market system, yet it
is altering it. The final method is for government to use legislation to force people to buy the merit good. For example, car owners might be forced
to buy car insurance. This lowers the cost for taxpayers and will be efficient, yet it will have the problems of people breaking the law, as well as the
possible high cost to low–income households. 7. Demerit goods are private goods with negative externalities, which cause harm to society. For

Positive Effects Of Externality
A teenager just turned sixteen and has their driving permit, on their birthday they decide to take the driving test. They end up passing the test
allowing them to get their driver's license.The parents are really proud of their kid and take them to the car dealership to look at a car.The kid ends
up finding a car and the parents buy the car for a birthday present. The addition of another driver and car onto the road ultimately creates more traffic
on the street. The addition of a new car and driver could be viewed as an externality, but what exactly is an externality?
Economist Arthur Pigou stated that an externality is the ," costs imposed or benefits conferred on others that are not taken into account by the person
taking the action" (Pigou AP, 1920). The Merriam
–Webster dictionary defines an externality as a secondary or unintended effect(Merriam–Webster,
1978). In other words an externality in economics happens whenever two parties are engaging in business and a bystander is affected by the action
that they had no part of being in. These actions can either be beneficial or harmful to a third party.
2. Positive Externalities
Externalities can usually have two different outcomes, those being a positive or negative outcome to the third party bystander. An externality that is
considered a positive outcome is one that will benefit a company or group that is not particularly involved in the activities of the two parties that are
working together. Say that someone produces

Market Failure
Introduction
A key cause of climate change is the failure of the market system to efficiently allocate resources to deal with extensive negative externalities,
specifically those caused by carbon – based gases polluting the atmosphere. Failure in the market system is having a extravagant impact on atmosphere.
The allocation of resources is affecting the environment but more specifically the carbon based gases are polluting the atmosphere. This is resulting in
global climate change. Potential solutions will be analysed throughout this essay to prevent market failure. The solutions that will be considered are
environmental taxation, government regulation and trading in marketable permits e.g. carbon credit market.
Market Failure ... Show more content on Helpwriting.net ...
Market failure is portrayed through this diagram as the optimum output is higher then the equilibrium resulting with spillover costs.
Property rights enable the parties to place a price tag on externality through negotiation, creating opportunities for both sides. The owner of property
rights can negotiate with the party causing the negative externality. The owner will seek compensation for the cost of the externality (Jackson,
Mciver, Bajada 2007:209). This is another issue regarding over allocating resources, as property is a commonly held resource. The externalities
involved with property rights can be good for both sides. Depending on the negotiation the owner can cause negative externality because they have
property rights and can decide what to do with the property. The party involved will seek compensation for the externality but this can lead to a
reduction in output. So properties are another resource where market failure can occur.
Environmental taxation
Environmental taxation is when the government taxes items that are effecting the environment to cover the externality cost. The government taxes
mostly on carbon based emissions as they are a major contributor to the climate change. Automobiles are a major contribution to effecting the
environment. As shown below cars are the highest percentage on impacting the climate.
Producers and consumers of automobiles are not required to compensate

Environmental Externalities In The Canadian Government
The Canadian government ought to take a tougher stand against business enterprises who are causing negative environmental externalities by levying
taxes, intensifying standards and introducing new environmental programs. Canada wants to be a world leader in climate change and now is the time
to act and set the standard. Revenues generated through taxes will be rolled into environmental programs and businesses will be forced to innovate to
find new ways of doing business.
Canada has deployed policy options in the past to deal with issues like global warming, hazardous waste, and air and water pollution, albeit they were
after the issues became critical. The government needs to take a stronger role and be a world leader in climate change, ... Show more content on
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It forces the business to make the decision on how to proceed, and they are faced with consequences if they continue. 2
Canada currently makes limited use of environmental taxes, in an OECD ranking of environmentally related taxes as a share of GDP, Canada ranks
between Rwanda and Tunisia, and India. The OECD average was 1.56%, Canada came in at 1.15%, the leading country was Denmark at 4.11%. This
shows that Canada has fallen behind others in environmental taxation and that changes need to be made.
However, taxes alone will not be able to solve the issue by itself, a multi–pronged approach is necessary. Taxes are one piece of the puzzle; quality and
quantity standards combined with the taxes will force the business to make tough decisions and force them to innovate and consider clean technology
options. Cap and trade systems may also be used with taxes, allowing business to emit a certain amount and make market decisions to purchase and
emit more; and taxing them on certain levels. 1
The next negative externality to address is the location of hazardous waste sites and the options to deal with them. The location of hazardous facilities
is a hot–button issue for many communities; evidence has emerged that communities close to toxic waste landfills suffered serious negative
consequences. 1 The problem with these facilities is they have to go somewhere, so they key is to locate them where there will have the least impact
on people

Tillock Externality
Tullock specifies a type of externality: in agreements that require collective action, certain individuals resisting the majority decision can hinder the rest
of the party's ability to acquire the benefits of the action. They are thus causing an externality because they are injuring the majority's ability to
accomplish a goal. Tullock goes on to explain that the "reason government exists is that on occasion (frequently) the agreement is incomplete," and
government must compel "everyone to take the required action" (Tullock 30). For example, in a taking motivated by what O'Connor calls "blight,"
property owners that refuse to allow their property to be rebuilt are blocking redevelopment that requires unanimous action in order to achieve the...
Tullock gives an example of having termites between his and his neighbor's land, and his neighbor's being "reluctant to do anything about" them
(Tullock 10). The neighbor could have extorted some money from Tullock in order to consent to have the termites exterminated on his land. On a
small scale therefore, we can see how people might be rewarded for negligence. While the termite problem may not necessitate an eminent domain
taking, if the size of the reward increases, we can see how the government might need to step in. If I chose to live in a house that was poorly
maintained and threatened to fall on my neighbor's house, I would probably be successful in extorting money from my neighbors for repairs; since I
have not earned this money through the creation of value, it seems only fair that the government should step in to fix the externality by repossessing
my house. Thus, Locke's limitation of eminent domain to that which directly increases production leaves room for people to extort money from
destructive

Reasons for Market Failure and the Roles of Government
Reasons for Market Failure and the Roles of Government
To Improve the Market Outcomes What is market efficiency? Market efficiency is defined as all participants in a market can get the maximum benefits
and used the minimum cost and effect to transact (BusinessDictionary.com, 2011). Besides that, the definition of market efficiency is covered by the
market and investor group. In other words, efficiency refers to the productivity or the size of the economics pie. If the size of economics more big, the
standard of living of people will be greater. Market efficiency means that there are no externalities, no market power or competitive power and it has
the complete information. According to Dothan (2008), "the market efficiency is ... Show more content on Helpwriting.net ...
It is known as non–rivalry in consumption, in other word, people who used the public goods will not affect others. Public goods are the goods that
everyone consumed and no one can be excluded (Tutor2u, 2011). Only government can produces public goods. Examples of public goods are street
lights and traffic lights. If the cost of street light is $20 and normally it will benefit the consumers in the same cost. However, street light is public
good it not only benefits the consumers but also benefit those people who not paying for it. Government will produce those public goods by using the
collected tax from citizen. When government builds more street lights in the road, it probably will reduce the car accidents during night time.
Therefore, it will benefit those who not paying the tax. There are several roles of government with purposes to fine–tune the economics and stable the
economics. In addition, the government is also raising the standard of living of citizens, avoid the high inflation and provide high employment rate
(AcademicWritingTips Organization, 2011). The roles of government are separate into two parts which are the use of monetary policy and fiscal
policy. According to AcademicWritingTips Organization (2011), "the monetary policy is including interest rates, deposit reserve ratio and the use of
the money supply; the fiscal policy is including the use of government revenue". One of the roles of government is the regulation

Negative Externalities Associated With The Use Of Plastics
Plastic is lightweight, strong, inexpensive to provide to consumers, and has a chemical makeup that does not allow it to decompose during our
lifetime. This is a problem because plastic's success in our society is causing us to overuse a product that is designed for temporary use with a
material that lasts for centuries creating a buildup of plastic within our landfills. The high mobility of plastic bags makes them particularly
problematic in society. Because of Cleveland's proximity to Lake Erie, it is important to stop the flow of this material into this important natural
resource. This paper investigates the negative externalities associated with the use of disposable plastic bags and the benefits of legislation that
would ban plastic bags from being given out at retail facilities. Scale of the Problem Chances are that at some point over the past week, you have
obtained a disposable plastic bag during a trip to a retail store. They are inexpensive to give to consumers and provide a utility in making the
carrying of retail products significantly easier. How many of these bags are out there? How often are they recycled? The numbers can be staggering.
According to a story reported by NPR, a study done by Roland Geyer, an industrial ecologist at the University of California, Santa Barbara, 8.3 Billion
metric tons of plastic has been produced so far – enough to cover the country of Argentina ankle deep. This production of plastic shows no signs of
slowing and in fact has

Essay On External Cost Of Driving
To begin, data sets and results are presented in summary tables along with bar graphs in order to easily compare changes for multiple groups. The
conclusions reached are presented categorically and are later on added as a total value. With this in mind, Lucas's results are as follow: the marginal
damages from local pollutants emitted from gasoline and diesel are $0.04 and $0.20 per liter of gasoline and diesel respectively (Davis, 2017), the
marginal cost from carbon dioxide emissions is $0.09 and $0.10 per liter of gasoline and diesel respectively (Davis, 2017), the marginal cost of traffic
congestion caused by the increased use gasoline and diesel is $0.27 and $0.26 per liter of gasoline and diesel respectively (Davis, 2017), and the ...
Small conducted this study in 2014, it is titled: "Getting Energy Prices Right: From Principle to Practice" (Parry et al., 2014). Lucas explains that
previous studies measured marginal damages for particular energy types and individual countries. Unlike previous studies, Ian W. H. Parry and
Kenneth A. Small were the first team of researchers to measure marginal damages for several different energy types for large set of countries (Davis,
2017). As a result, data sets as well as conclusions reached are heavily relied upon from this article.
Finally, Lucas discusses the prospects for alternative fuel vehicles for the purposes of reducing negative externalities. In this section, he explains that
there are various alternative vehicles that can be used in reducing the external cost of gasoline and diesel including natural gas vehicles as well as
vehicles that rely on biofuels (Davis, 2017). Nevertheless, in the study conducted, Lucas focuses on electric vehicles (EV) as it is perceived as one of
the primary alternatives to fuel vehicles (Davis, 2017). In the article, Lucas offers a pessimistic outlook on EVs claiming that despite subsidizing the
purchases of EVs, it would not solve the problems of traffic congestions and accidents. As it is mentioned: "Probably most importantly, alternative fuel
vehicles do little to reduce traffic congestion and accidents, two of the largest components of externalities. Subsidies for alternative fuel vehicles might
even

The Theoretical Basis Of Congestion Costs
2.2Theoretical basis of congestion costs (diseconomies)
One by–product of agglomeration is congestion, which arise as economic agents compete for limited land, limited output markets, and limited fixed
public infrastructure such as highways and communication facilities. Other negative consequences of agglomeration such as environmental pollution,
noise, and high crime rates may also occur.
In general, congestion externalities originate from the difference between private and social costs. The literature on optimal city size suggests that
households and firms choose to locate in a city by evaluating the prevailing average social costs (AC)–such as local taxes or commuting/transport costs
in the city, but ignoring the increased social costs their arrivals generate for the whole urban population (Alonso 1971; Richardson 1972; Mills and De
Ferranti 1971). Therefore, the average social cost would usually be lower than the marginal social cost (MC) born by the city as a whole (Alonso
1971; Richardson 1972; Mills and De Ferranti 1971). Firms and residents would continue to move into the city as long as marginal benefits, as
represented by marginal value of outputs (MP) in the city, exceed the marginal social cost plus the opportunity cost of moving (MP > MC +
opportunity cost for moving) (Alonso 1971; Richardson 1972). The result is that cities would grow to a size that is more congested than the optimal
size for maximizing urban production, that size being the point where the

Eco 100 Assignment 1
Principles Of Economics Strayer University ECON 100 March 12th 2012 Suggest how an economist would approach the problem of alcohol abuse.
Provide two (2) possible solutions to this problem. Include the four (4) elements of the economic way of thinking in your analysis It is a real case of
negative externalities both in consumption and production. production of alcohol causes pollution too. The two possible solutions suggested by
economists are: Coase theorem–They can negotiate by themselves for compensation without any government intervention if the property rights are
secured and the cost of negotiation is not high. Pigouvian– taxes or regulations. Drunk driving is included. An economist would increase cost through
added... Show more content on Helpwriting.net ...
How does the alcohol abuse hurt me and what are my costs if I am not the abuser. We will pay for this in taxes and service.
(TerrmPaperWarehouse.com, 2012) Analyze how prescription drugs affect the demand and supply of other products and services in this country. The
rise in costs of prescription medicines affects all sectors of the health care industry, including private insurers, public programs, and patients. Spending
on prescription drugs continues to be an important health care concern, particularly in light of rising pharmaceutical costs, the aging population, and
increased use of costly specialty drugs. In recent history, increases in prescription drug costs have outpaced other categories of health care spending,
rising rapidly throughout the latter half of the 1990s and early 2000s. (Kaiseredu.org, 2012). Formulate a reason why the elasticity of demand is an
important consideration when analyzing the impact of a shift in supply and why the elasticity of supply is an important consideration when analyzing
the impact of a shift in demand. Include at least one (1) example in each scenario. For example, the tax incidences will change based on both the
elasticity of demand and supply. The consumer has to

Advantages And Disadvantages Of Public Goods
INTRODUCTION
PUBLIC GOODS
Public good is an item whose consumption is determined by society not by individual consumers. Examples include national defense, law
enforcement, parks. These goods are financed by taxes because they are created for the welfare of public. Basically the goods which can be
consumed without reducing its availability to other individual and the other one is not excluded are public goods. The vice versa of these goods are
private goods. A private good is a product that must be purchased to be consumed and its consumption is done by one individual. For instance, candies:
the person who would be purchasing them , would be having not the person did not purchased.
A public good is an item consumed by society as a whole, for instance defense. This would be for every citizen for the country, even the person who
did not pay the tax. This gives us the one characteristic of public good that is NON– EXCLUDABLE. These goods are being produced for the welfare
of the whole society rather than focusing on one individual. While ... Show more content on Helpwriting.net ...
But the brewery would be willing to pay the chemical factory to reduce the amount of effluent, because this will reduce the costs of brewery industry.
Such a reduction in effluent may reduce the chemical industry's profits, as the firm's output of chemicals and the effluents are in fixed proportions and
any reduction of effluent, thus, requires a reduction in output of the chemical industry. If the reduction in the brewery industry's costs exceeds the
reduction in the chemical factory's profit, there are potential gains from trade and the original level of effluent cannot have been efficient. This
observation leads to a possible solution to the externality problem presented by

Storm Shelter Externality
An externality is side effect of an action that affects the well–being of a third party. Storm shelters are an externality because not only are the owners
safe but neighbors, animals, and others can also enjoy the benefits of a storm shelter. Storm shelters are a positive externality because the third party
(the neighbors) gain a benefit from the shelters. The party causing the spillover from the shelter is the owners. They are allowing others to come
inside and receive the benefit the shelter gives by being safe from the storm. I believe that the owners are behaving ethically by allowing the spillover
because it would be wrong and unjust to deny another human shelter to help them survive an event like a tornado.
This externality is positive

Externality Of Currency
All throughout history there have been a few different types of currency in America that have been taken out of the monetary cycle, such as the
half cent. The reasons were because the cost of the currency being produced was higher than the actual face value of the currency. As many
historians say, "history repeats itself" is because it actually has! In 2005 was when the penny finally reached the cost of one cent in order to produce
one penny. In 2011, it costed about 2.4 cents to make one penny. This was because the price of zinc increased, or the US dollar has gone down in
value. The penny would be considered a negative externality, because the US Mint keeps making the decision to keep producing them and they do not
have to pay the full cost of continuously producing the penny. This occurs, because the currency being produced comes from the US citizens taxes.
Since the penny is a negative externality, the cost to society is greater than the cost a consumer is actually... Show more content on Helpwriting.net ...
Since US Mint only pays for the marginal private cost of producing the pennies, it will produce where the marginal private cost is equal to the
marginal private benefit. But since there is a negative externality, the marginal private cost is not the same as the marginal social cost. Since pennies
have become a market failure, government intervention needs to be implemented in order to correct the market failure quantity to move more towards
the social quantity which always has the opportunity to move the penny market closer to a more efficient solution and reduce deadweight losses. Also,
I believe that the government needs to intervene and completely abolish the production of pennies and have every product sold for every business
round up to the nearest five

Marginal Costs And Its Effect On Market Efficiency
Marginal costs and benefits are utilized as a form of measurement of costs and benefits at a specific level of production and consumption. Everyday
individuals, groups, and institutions make decisions based on our marginal evaluations of the alternatives. They do this by asking questions: "What
will it cost to produce one more unit", and "What benefit will be received by acquiring one more unit"? In this essay, the author will define and
discuss marginal costs and benefits and their effect on market efficiency in the presence or absence of externalities.
What Are Marginal Costs and Marginal Benefits?
Marginal benefit is the gain you receive for doing anything one more time (Urban Economics, 8E). Marginal benefit is typically measured in ... Show
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However, once they have one, they will only consider buying a second widget at 20 dollars. If they buy a second widget from your shop, it is based
solely on the value–laden perception that the widget's benefit is worth the 20 dollars. If the consumers do not perceive that the widget has 20 dollars
benefit or use, they will not purchase another widget at the 20–dollar price level. Therefore, if your shop wants the consumer to buy widgets, the owner
must either lower the price or offer some other promotional benefit. Consumers ' marginal benefit is also referred to as "marginal utility"(Urban
Economics, 8E). According to the law of diminishing marginal utility, "as a person increases consumption of a product, while keeping consumption of
other products constant, there is a decline in the marginal utility that person derives from consuming each additional unit of that product" (Urban
Economics, 8E). As the marginal benefit for widgets declines among your customer base, so does the price they are willing to pay which in turn
affects your marginal benefit as a widget producer.
"Marginal cost is the total cost you incur to produce one more unit" (Urban Economics, 8E). Following the example from the previous paragraph, it is
the cost to make one more widget. Since, marginal costs are

A Comparative Study On Information Security Essay
Introduction
Information security is typically over looked and/or ignored but consumers and corporations. In most cases one side will refuse to correct for the
externalities caused by their computing machines. This changes when an externality ends up causing another great enough externality to the original
producer of the externality. When a study was done determining the willingness for people to pay for the mitigation of information security both
personal and external, the study found that people do act more in favor of self–interest and are unwilling to correct for the externalities. In a second
comparative study this also ended up being true for corporations as it would cost them more to fund security, then to simply out play their competitor
and ignore the problems. It was also shown that as consumers/corporations were more affected by security issues other firms would use this against
them allowing for price discrimination.
Analysis
First, taking into account incentives of investing in information security, Anderson and Moore (2006) looked at actions taken by companies and
individuals. What Anderson and Moore found was that most individuals and companies had no incentive to invest in information security and would
typically pass the liability off to someone else. Anderson and Moore found that (in a study done in 2000 by H. Varian.) many people would not invest
in antivirus in the year 2000 since at the time most viruses were not targeting the individual but, simply

One More Externality Article Analysis
In the paper "Comments: One More Externality Article" Peskin (1988) refers to the debate between Freeman, Bird, and Baumol and Oates to determine
the distinction between depletable and undepletable externalities. Depletable means that if there is a fixed amount of pollution, it will be reduced as
one person "consumes" it. When there is not a fixed amount of pollution that is reduced as it is consumed, then it is undepletable. For example, air
pollution can be considered a depletable externality, because air pollution can be reduced by each extra person who "consumes" it. On the other hand,
nuclear radiation can be counted as an undepletable externality, since nuclear emissions are generally permanent damages that cannot be reduced when
an extra

Externality
This report is focused on identifying the externality, analysing the possible solution to internalise the externality.
The market for fast food is a market failure because the price of fast foods does not cover the social costs of consuming them.
Fast foods contain low nutritional value and are high on fats, sugars and sodium (salt). As a result fast a major cause of obesity in New Zealand.
Eating fast foods can also cause a variety of other health problems including: High cholesterol, high blood pressure, depression, respiratory problems,
dental problems and diabetes. High cholesterol, together with high blood pressure are a leading cause of strokes. Some studies have also found a link
between diets high on fast foods and negative affects on the brains synapses. All these medical conditions put a lot of stress on our health care system.
In 2014 the New Zealand parliament concluded that the health care costs attributable to obesity, and diabetes was around $686 million. And the costs
of Strokes to the New Zealand health system is estimated to be around $700 million. From these ... Show more content on Helpwriting.net ...
This is because there is a spill over cost to society that is not reflected in the private benefit (MB) of fast foods. So MSB lies below MB.The difference
between these two is the Spill over cost or externality.
The Spill over costs from excessive fast food consumption come from the cost of health care, that people who consume too much fast food will require
in the future. These costs of health care could include heart surgery, cert transplant, cholesterol medication, diabetes medication and blood pressure
medication.
So at the private equilibrium PM dairy is under priced, as it only reflects private costs and benefits. As a result dairy is being overproduced at QM.
Society would prefer if supply was at QS and if the price was at PS, to reflect the true costs, both social and private from fast food

Difference Between Renewable Resources And Non Energy...
1/ A clear explanation of the difference between renewable resources and non renewable resources
Renewable resources can be used and replaced. Examples are fish stocks, forests, or water. They are resources that will refilled by itself through
reproduction, plantation through the nature cycle. They are natural resources that technically regenerate itselves through ecological process.
Non renewable resources, such as coal, oil, gold and cooper, are land resources which once used will never be replaced. Once they are used, the
quantity of those kinds of resources would be reduced. Scarcity may exist in this situation, Scarcity implies that there are unlimited wants in the world
but with limited resources. For resources like coal, mine, gold they are limited resources which cannot satisfy all human wants. In other words, we want
goods but there are not enough resources to provide us with all the goods want. On the other hand, for renewable resources, it doesn't mean that it has
unlimited quantity. Whereas rapid population growth, maldistribution of resources can lead to scarcity for human. Since the quantity deployed is faster
than the rate of quantity produced.
(Economics by Alain Anderton P.)
2/ A clear explanation of joint demand and joint supply
A good which is purchased with other goods to satisfy a want is called complement.
When two or more complements are bought together. They are in joint demand. This mean that, in demanding for one good, a consumer will also be

Competition Policy On Two Sided
1 Competition policy on two–sided markets: literature review
On a TSM, an intermediary platform provides services allowing two sides of users to interact with each other. For example, an online market serves
sellers on one side and buyers on the other side. An integral part of every TSM is externality between two sides: buyers benefit from a greater
number of sellers and products proposed on the platform, sellers benefit from a greater number of potential buyers who use the platform. The utility
obtained by each side depends on the number of users on the other side and vice versa.
According to Rochet and Tirole (2006),
"a market is two–sided if the net utility on one side increases (decreases) with the number of members on the other side, ... Show more content on
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The theory of two–sided markets was partially based on and is related to the theory of intermediation and of multi–product firms. A TSM model is close
to the model of a multi–production: two products are represented by two services – to side 1 and to side 2 – with interconnected demands. The profit
function of a two–sided platform could describe behavior of a multi–product monopoly, given that both models are characterized by nonzero cross
elasticities. But the mechanisms of demand interdependence are different. In case of two linked products, demand on one good depends directly on the
price of the other complement or substitute good, and this price interdependence is internalized by one consumer who wants to use both goods. On
multisided markets, demand on one good doesn't depend directly on the price of another good, but on the level of its consumption.
Positive externalities between two sides imply negative cross–elasticities. The well–known result is that multi–product monopolist's price in the case of
negative price elasticities
(product complementarity) is lower. By analogous reasoning, under two–sided positive externalities prices on both sides are lower, and the number of
consumers on both sides is higher than without externalities. Price of each side positively depends on the externalities it creates on the one side and

Externalities Of Smoking
are preventable (US Department of Health & Human Services, 2014). Additionally, the health care costs of smoking amount to $96 billion each year
(Barendregt et al., 1997). Yet, this is an underestimate of the total costs of smoking because of the many externalities associated with cigarette
consumption. Clean–up and secondhand smoke are two common examples of these externalities. For instance, cigarette butts contain several dangerous
chemicals (e.g., nicotine and ethylphenol) and the butts themselves are non–biodegradable. Furthermore, nonsmokers exposed to secondhand smoke
suffer a 20–30% increase in lung cancer risk (US Department of Health & Human Services, 2014); reinforcing the need to address both active smoking
and passive smoke exposure

Economics
what are externalities?
Externalities are common in virtually every area of economic activity. They are defined as third party (or spill–over) effects arising from the
production and/or consumption of goods and services for which no appropriate compensation is paid.
Externalities can cause market failure if the price mechanism does not take into account the fullsocial costs and social benefits of production and
consumption.
The study of externalities by economists has become extensive in recent years – not least because of concerns about the link between the economy and
the environment.
PRIVATE AND SOCIAL COSTS
Externalities create a divergence between the private and social costs of production.
Social cost includes all the costs of ... Show more content on Helpwriting.net ...
If we assume that the producer is interested in maximising profits – then they will only take into account the private costs and private benefits arising
from their supply of the product. We can see from the diagram below that the profit–maximising level of output is at Q1. However the socially efficient
level of production would consider the external costs too. The social optimum output level is lower at Q2. This leads to the private optimum output
being greater than the social optimum level of production. The producer creating the externality does not take the effects of externalities into their own
calculations. We assume that producers are only concerned with their own self interest.
In the diagram above, the private optimum output is when where private marginal benefit = private marginal cost, giving an output of Q1. For society
as a whole though the social optimum is where social marginal benefit = social marginal cost at output Q2.The failure to take into account the negative
externality effects is an example of market failure.
NEGATIVE CONSUMPTION EXTERNALITIES
Consumers can create externalities when they purchase and consume goods and services. o Pollution from cars and motorbikes o Litter on streets and
in public places o Noise pollution from using car stereos or ghetto–blasters o Negative externalities created by smoking and alcohol abuse o
Externalities created through the mis–treatment of animals o Vandalism of public property
o

Negative Externality Pollution Essay
Negative Externality Pollution Negative Externality: Pollution
Pollution has become a heated issue in recent years. The destruction of the environment along with serious health problems are the eventual effects. The
extensive use and availability of automobiles, tremendous amounts of production in the booming economy and the constant increase in demand for
energy, can be held responsible.
Pollution and its effects can definitely be categorized as negative externalities. Although millions are inevitably responsible, nobody in their right mind
enjoys being subjected to these conditions. Long–term affects of air pollution include chronic respiratory disease, lung cancer, heart disease, and even
damage to the brain, nerves, ... Show more content on Helpwriting.net ...
By limiting the amount of pollution will diminish the risk of health problems caused by these toxins. Now many industries have gotten involved with
a technique called carbon trading in which those with high pollution releases buy the rights to pollute from others with low amounts of releases. This
is a controversial approach to reduce pollution because it allows unnecessary amounts of pollution to be released. If companies chose to sell their
rights, what they sell would not have been used in the first place; now they will be used by companies who can afford to purchase them. It is
extremely expensive to purchase these rights, however some major companies can do so.
In my opinion, all pollution standards should be tightened but over a period of time. I agree totally that pollution is out of hand at the current time,
however it is a problem that has built up for many years and can't be solved all at once. I feel that it is somewhat unfair to those companies who
depend on their current status. By implementing procedures and regulations that are to occur over a period of time, it allows many companies to adjust
gradually. I also feel that this policy of carbon trading should be eliminated. Although it does generate income for industries that currently comply, it
allows many others to evade responsibility. I also feel that such things as public transportation and carpooling should be stressed. It provides an
alternative that will drastically

Paul Krugman Microcononomics 16-17
1
Chapter 16 Externalities
Consumers and producers are internal to a transaction. Consumers receive a benefit from the goods they purchase, while producers pay the costs of
production. An externality (sometimes called a spillover) is a cost or benefit that goes to someone external to a transaction. Pollution is a negative (cost)
externality. Education and research create a positive externality. Externalities can result from consumption or production.
2
An Example:
Suppose that the costs of raising livestock are mostly borne by the rancher, but there is a spillover cost. Streams nearby get polluted, and this affects
people (and other species) who use the stream as well as spinach farmers who also use the water for irrigation. ... Show more content on Helpwriting.net
...
6
13
Consider the case of stream pollution by livestock
Suppose the cost of preventing stream pollution is lower than the cost to spinach producers and other users of the stream. If spinach farmers have the
right to clean water, then ranchers will not be willing to pay spinach farmers enough, and will be forced to prevent the pollution. If ranchers have the
right to pollute the water, then spinach farmers would be willing to pay them enough to prevent it. Either way, the stream will not be polluted, and this
is the most efficient outcome.
14
Suppose that costs are too high
Suppose the cost of preventing stream pollution is higher than the cost to spinach producers and other users of the stream. If spinach farmers have the

right to clean water, then ranchers will be willing to pay spinach farmers enough to allow pollution of the stream. If ranchers have the right to pollute
the water, then spinach farmers would not be willing to pay them enough to prevent it. Either way, the stream will be polluted, and this is the most
efficient outcome.
7
15
What Can Possibly Go Wrong?
Perhaps nobody owns a clear right to the stream. Sometimes clear rights are impossible to assign. In some countries it is due to a flawed legal system.
The property right may be unenforceable. The externality may affect those unable to organize or negotiate in their interests. Transaction costs may be

Negative Externality Of Alcohol
Alcohol is the most widely used drug in the world, because of its accessibility. The term alcohol refers to the primary alcohol ethanol. In 2015 about
89% of adults in the United States stated that they had consumed alcohol at some point in their lives. Alcohol is a demerit good, because it can have
negative effects on the consumer. The effects of alcohol consumption can also impact other people and those spill over effects are called negative
externalities. Negative externalities cause market failure, because an individual's incentive for a certain behavior does not lead to rational outcomes for
society.
Negative externalities of alcohol consumption can be for example when a person is injured from bad drinking habits, needs medical or psychological
treatment, and their family has to pay for it.
In Figure 1 you can see that the external cost, being the therapy the family has to pay, makes the curve for the marginal social cost (MSC) higher than
the curve for the private marginal cost (MPC). In this case the marginal social cost is the impact the person drinking has on others and the marginal
private cost is the price of the alcohol consumed. Now Q1, the socially efficient output, is a lower output that the market equilibrium, at Q.
When a person's property is destroyed by someone who is drunk, for example, in a car accident, that is also a negative externality of alcohol
consumption. In Figure 2 you can see that 40% of the highway fatalities involved alcohol and accounted for about 13,000 deaths in 2010 in the United
States. Here the marginal social cost would be the loss of a functioning vehicle and the payments to repair the property, which were damaged. The
marginal social cost is higher than the private marginal cost and the socially efficient output is again lower than the output at market equilibrium.
The free rider problem does not apply to alcohol consumption as a negative externality, because alcohol is not a public good. Free riders use public
goods and do not pay for them. Alcohol is a private good, because you have to buy it in a store and if you took the last bottle of chardonnay the others
cannot buy anymore chardonnay, so it is excludable.
Although you might think that there may be no social

Eco/365
What is an externality? Provide at least three examples. How does one of the examples you provided affect the market outcome? What is the role of
government in addressing the implications of an externality you provided as an example? Is it possible that a government's solution to a market failure
would worsen the failure? Explain your answer.
Externality is defined as an effect of a decision on a third party not taken into account by the decision maker. There are two types of externalities being
positive and negative. Second hand smoke would be a negative externality. The smoker does not take into account the smoke emitted from their
cigarette. Education would be considered a positive externality. When an individual is educated, their... Show more content on Helpwriting.net ...
In regards to Apple, if the government was to only offer incentives to Apple, there would be a negative externality for other companies that offer similar
products.
#Another Response
Externality can be either positive or negative. If one is building a plant to extract oil from the ground, the positive externality is the added jobs for the
community. However, the potential pollution from the plant could be conceived as negative. The externality affect is when one does not control the
impact from another person or companies decision. Another positive externality is the improvement of a workforce in an organization that employs
local labor. Pollution is widely viewed as the top negative externality.
Pollution is a major issue in many communities. It affects the local population and the number of people moving to the area, in addition to the potential
workforce. If externalities result in an unsafe community, it will result in fewer residents and less economic growth. Government controls on pollution
is very effective if patrolled. Many regulations are not monitored, thus companies often find ways to avoid the regulations. Government officials need to

What Is The Strange Dichotomy
The strange dichotomy is a problem of organizational design where in which one needs to establish how to change the structure of government in
order to allow for the efficient delivery of public goods. The Second–Generation Theory (SGT) suggests that decentralization occurs in order to enforce
the alignment of perverse incentives. The foundation upon which the Second–Generation Theory rests, stems from the application of
industrial–organization, to the greater public sphere. There is a trade–off between local accountability and the coordination of policies (Oates, 2005). In
addition, the rational for decentralization of the public sector has no relation to the preference revelation problem. Instead, in terms of the political
sphere there is a political accountability problem. In order to solve this organizational design issue, one can draw on the theory of Tiebout, where in
which he emphasizes the idea of treating the state as if it were a market. As mentioned above, this will result in competition amongst jurisdictions as
well as enforces a sense of public mobility, where if the economic agent finds itself dissatisfied with the service received by their current jurisdiction,
they are entitled, under such circumstances, to relocate to another jurisdiction. In terms of competitive federalism, as outlined by Qian & Weingast...
The paper provided two solutions that contradict the strange dichotomy. The solutions provide reasons as to why central government intervention is not
required to establish preferences at a local level. The first solution is a competitive decentralized government as proposed by Oates. The second
solution provides insight into unconditional grants that are made use of to solve preferences that are not known, ex–ante, once decentralization has
occurred in order to align perverse

Main Purpose Of The Market
A market is actually a system where all the participants are engaged in exchanging goods, services or informations. The main purpose of these
exchanges is the profit. A market is called efficient when supply and demand are equal and the price that the consumers pay for goods is equilibrium
with the cost arising from producer 's economic activities.
There are some goods which are non exclusive and non–rival in consumption such as Safety and Environment. These are called Public goods.
However in shipping market participants are not reluctant to invest or to provide for measures on safety and environment as they will not have any
profit which is the main purpose of the market.
When market fails to control abuses of monopoly power, fail to provide all the necessary public goods or fail to provide enough merit goods then it is
called a 'market failure '.
The 'market failure ' led the state to intervene in international shipping in order to improve safety, protect the environment and increase market 's
efficiency.
There are many economic theories regarding the State intervention, into the market and the concept of 'market failure '. This essay is analysing some of
these theories in order to understand the rationale for the state intervention, especially in the market of international shipping and maritime transport. It
is analysing also concepts of externalities which arise from market failure and the role of state in providing support to navigation through many
different ways.

Negative Externalities And The Effect On The Perception Of...
Introduction
Telling the reader what the essay is about and a brief overview of the different components of the essay. This part is critical to capture the interest of
the reader. This paper will cover what falls under the general category of externalities, an externality arises when a person engages in an activity that
influences the well–being of a bystander but neither pays nor receives compensation for that effect. If the impact on the bystander is contrary, it is
called a negative externality, on the other hand, if it is beneficial, it is called a positive externality. I will explain how microeconomic tools and
materials we have covered this semester apply towards externalities and then follow on to its historical analysis. Then I will take it back to the role of
the government with externalities which will then lead to how externalities are relevant in my daily life as a student at Cal State Dominguez Hills and
why it is important to my readers to understand why. Society's interest in a market result ranges beyond the well–being of buyers and sellers who
contribute in the market. The market equilibrium is not effective when there are externalities because buyers and sellers neglect the outside effects of
their actions when determining how much to demand or supply. That is to say, the equilibrium fails to exploit the total benefit to society as a whole.
Descriptive Section
Apply microeconomic tools and materials discussed in class to help the reader understand the

Sugary Beverages and Junk Foods are Causing Obesity in Mexico
According to Agricultural Organization and UN Food, Mexico's adult obesity rates are above that of the United States, with an obesity rate of 32.8%
compared to the 31.8%. Junk food and sugary drinks have caused these rate to rise, which makes them negative externalities of consumption, which
the private benefits to consumers of a good are greater than the social benefits of its consumption, in other words the good creates spillover costs on a
third party. A tax, payment made by an individual or a firm to the government, has been imposed by the Mexican government to eliminate such
negative externalities. The tax is expected to decrease demand for the good. The Cross price elasticity, the measure of the responsiveness of consumers
of one... Show more content on Helpwriting.net ...
A tax on these goods decreases the supply to S+tax, which drives up the price of the good. Those who consume these goods now witness increased
prices at Pso. Due to the law of demand its expected to see a lower quantity of these goods consumed. Fast food goods, although have a steep
demand curve meaning demand is very price inelastic, an increases in prices for the good won't receive much of a response but if the government
is to impose a tax such that it greatly increases the price of fast foods to gap that of healthier food, then we can begin to see some response from
consumers. The equilibrium quantity, therefore falls closer to the social optimum (Qso). However, we witness decreased consumer surplus from
A+B+C+D to A and decreased producer surplus from E+G+F to B. The corrective tax, imposed on fast food and sugary beverages has in fact
eliminated the externalities, which corrects the overallocation of resources. In the case where the tax imposed had made the prices for fast foods
greater than that of healthier food then these goods would have a positive cross price elasticity. For example, if there is an increase in the price for
fast food by 10% and quantity demanded for healthier food increases by 2% then XED = +0.2, and because this is a positive number we can see that
they are substitutes. In the diagram to the left we witness that these goods are cross price elastic. When an increase in prices for fast foods (P1 to P2 ), an

The Failures Of Market Failure
Market failure, in economic terms, refers to a situation wherein the free market fails to efficiently allocate the goods and services. Or in other words,
during market failure, another conceivable outcomes (non– Pareto optimal) exist wherein a market participant is found to be made better–off without
making anyone else worse–off (Francis Bator, 1958). The failures in market can be seen as the scenarios in which the pursuit of pure self–interest of an
individual leads to inefficient results as per the societal point of view and bearing high chances of improvement. Basically, market failures occur when
the market lacks economic efficiency.
Market failures may occur due to a plenty of reasons including asymmetries in information, externalities, monopoly, time inconsistent preferences,
principal agent issues, public goods, or non–competitive markets etc. Therefore the market failure often requires the intervention of supra–national
institutions and self–regulated governments and organizations in that particular market (Joseph Stiglitz, 1989). Micro–economists are usually involved
in the task of identifying potential causes of market failure and suggesting appropriate corrective measures. An important role is played by such an
analysis in number of public policy studies and decision making. Historical records show us that governmental interventions have various impacts on
the economy of its country. However, poorly implemented governmental attempts for correcting market failure

National Minimum Drinking Age Act Essay
In 1984 the United States Government approved the National Minimum Drinking Age Act that required that "the States prohibit persons under 21 years
of age from purchasing or publicly possessing alcoholic beverages as a condition of receiving State highway funds." Even though this bill was nowhere
near the magnitude of the prohibition act that was passed less than a century before it, the act still damaged the relationship between individuals, firms,
and the United States government. Although the intentions of the government were to control alcohol consumption among citizens aged 18–21, the
passing of this act affected the equilibrium already established by a consumer–producer market, created a market failure and a black market, and
introduced excise taxes into the market. When the National Minimum Drinking Age Act passed, two markets were directly affected by the outcome
and those markets were the producers, the alcohol industry, and the consumers, US citizens aged 18–21 years old. Leading up to 1984, there was no set
minimum age for purchasing alcohol and so, with the rising concern of drunk driving fatalities, the government decided to limit the alcohol market. A
demerit good is a good that is both over–produced and over–consumed, and is considered harmful to a person or a society. When the government
decided that alcohol was a demerit good, and raised the minimum age, the market demand for alcohol decreased as the number of consumers decreased
and the quantity

A Business 's Responsibility For An Efficient Allocation...
It is a business's own responsibility to define the external economic environment to ensure their market will be successful. When businesses are free
and left to peruse their own private objectives it is extremely important economic efficiency is carefully thought about as there are a range of market
failures that could occur which lead to government intervention. "Market failure occurs when freely–functioning markets, fail to deliver an efficient
allocation of resources. The result is a loss of economic and social welfare." (Geoff Riley,2012).To avoid market failure businesses must be aware of
changing market conditions.
All organisations have to face the 'Economic Problem' this is deciding what to produce, how to produce it and who to ... Show more content on
Helpwriting.net ...
Legal monopoly can be companies that operate as a monopoly under government order, these companies will offer products or services at a structured
price and can be independently run and government regulated or both government run and regulated. An example of legal monopoly is the price of
alcohol or air flight prices, the government can always intervene and change the prices. Natural monopoly are companies which produce a product in
economies of scale for example production would be permanently concentrated in a single firm rather than contested competitively, such as water, gas
and electricity firms. Local monopoly is usually where an organisation is the only supplier in that area– for example a petrol station in a small town far
from the city. They will receive all purchases for that particular product as there is nowhere else to get it.
There a number of problems that can occur within production leading to market failure within an organisation. Markets who are in high competition
are often run by big firms with high monopoly power which can lead to exploitation of suppliers, consumers and employees. Big firms also try avoid
direct costs which will lead to environmentally damaging use of resources. In order for the govern–ment to attempt to correct their monopoly
manipulating any stakeholders, The Competition and Markets Authority (CMA) and The Office of Fair Trading, investigate possible abuse of market
power.

Economics
A market failure is when there are not enough resources that are inefficiently allocated due to imperfections in the market mechanism. When a resource
is inefficient it means the resources are not used in the best distribution by firms or organizations. An ETS is executed when the environment has been
polluted and the government intervenes in order to control the pollution by providing economic encouragements towards the firms and organizations to
reduce the amount of pollution emitted in the environment (Brown* 2001). When ETS is implemented it reduces the pollution of the environment
caused by different firms thus making it its main goal. The type of market failure the ETS is addressing is the negative externalities.
An externality is ... Show more content on Helpwriting.net ...
This causes an equal amount of harmful amounts being emitted by the firms.
A fee or tax that is set on the pollution that a firm or source produces is called pollution charge systems (Pigou 1920). This will cause the charges for
marginal cost to increase and supply to decrease. This will cause the consumer or producer to focus on the externalities thereby improving the price
mechanism of the failure. When the consumers or producers of the goods or services pay for part of the negative externality that they have caused
towards the third party; the private cost increases thus turning the whole situation into an allocative efficient economy. An example of a pollution
charge is the deposit refund where an individual buys a product that can cause harm to the environment and gets a refund when the individual has
recycled or disposed the product to an approved center.
A tradable permit is when the firm or organisation avoids the problem by reaching the same cost minimizing allocation of control burden as a charge
system (Crocker 1966). Firms that reach this target can be able to offset excess emissions in other parts of their facilities or sell their surplus permits to
other firms.
When the government authorities remove existing explicit or implicit barriers to the market activity is called a market barrier. Barrier reduction,
liability rule and information

Externalities
Micro Economy
Externalities
Elizabeth Turra Brouwer
11–1175
9/08/201
An Externality is when costs or benefits of certain activities spill or fall into third parties that have nothing to do with the initial situation in hand; its
like a side effect or consequence of an activity that affects other parties who did not choose to incur that cost or benefit.
Like you can see there can be either costs, or benefits that affect those third parties. When it is a cost that is imposed on third parties, it is called a
negative externality; negative externalities occur when a decision or activity imposes costs on anyone that is not involved in the making of the
decision, that is if a decision imposes any kind of external cost, which are ... Show more content on Helpwriting.net ...
When the government gets involved and taxes goods and services, it raises revenue for the government, decreases the quantity of goods produced and
consumed and therefore, both consumers and the producer of the good will pay, splitting the costs of the tax and leveling up with society's.
Fees and regulations are similar to taxes. The government charge all firms the same fee and to set the same standard for all firms. This will achieve
the same level of emission reduction at a lower cost for all firms and firms will have an incentive to reduce their emissions.
There are also solutions to a positive externality. That is to get the decision maker to internalize the external effect. The difference with this and the
negative externality is that with the negative externality they would have to try to get the decision maker to see higher costs and with the positive
externality the government needs to somehow make the decision more appealing to the private decision–maker.
A great example of this is getting a degree; it might not be as important or beneficial to you to get a certain degree but the benefits that you could give
the society with that degree can be significant, so the government creates scholarships and incentives to motivate you and make it easier for you to get

an education and ultimately be part of the working society.
There are 3 ways of target the allocation problem of externalities, I talked about regulations,

Externalities of Shipping
Shipping is one of the best examples of generators of externalities. There is a range of externalities involved in shipping such as water, noise, air,
congestion, death and injury. The economics of maritime safety and environment specialises in studying the relationship between the economic system
and the maritime safety and environment system and the way the two systems interact. Such a study aims at achieving a balance between the
objectives of the two systmems. In order to face these externalities and reduce them to the minimum, so as they do not affect the environment, is
important to produce such proposals for economic policies for the maritime sector. It is essential especially for a chairman or a chairwoman of Global
Commission on... Show more content on Helpwriting.net ...
Last but not least, the usage of low–sulphur fuel oil is important. Congestion of ships in ports can be really harmful since it produces temporary
reductions in performance. What can cause a congestion could be that the port has not been able to invest in cargo handling equipment, or more
berths and it has been left behind by trade expansion. This usually takes place in poor countries. The problem can be solved easily since most of
the new ships are having on their decks their own equipment for the loading and unloading of the cargo. On older ships that they do not have that
advantage, an installation of cranes can be really useful since in the case of landing in a port which is as it mentioned before, they will not have to
wait for long. So, both the workers at the port and the shipowner are satisfied. The congestion in ports is creating another externality in the bulk trade
since ships are being loaded to the maximum in order to increase vessel turnaround through the commercial pressure with vessels encountering really
high speed. This causes serious stress issues which is affecting the vessel. The ship as well as the crew are put into risk while the port benefits from
rapid turnarounds. Nowadays there is no preventing measure, although the regulations for construction ratified under the second chapter of SOLAS
which has to do with the Safety Of Life At Sea (IMO 1974).

The Externalities of Smoking
Introduction
In the past decades, an increasing number of countries have imposed a ban on smoking in public places, including restaurants and bars. Unlike other
regulations of cigarettes such as tax or promoting ban, this territorial smoking control sparked heated debates. While some argue that the
implementation of this regulation is inefficient and reduce the public welfare (Viscusi, 1994; Tollison and Wagner, 1992; Lambert, 2006), others claim
that smokers do impose negative externalities to both non–smokers and themselves (Gravelle and Zimmerman, 1994; Hanson and Logue, 1998).
In this study, by explaining the externalities of smoking, we try to examine the territorial restriction on smoking using some basic economics words. We
explore ... Show more content on Helpwriting.net ...
In Figure 3, the social demand curve is above the private demand curve because the social demand curve takes into account the consumption
externalities of smoking. The gap between the two curves reflects the negative external benefits of smoking. Same as the external costs of smoking in
Figure 2, the equilibrium quantity QMarket is not the optimal quantity. The social optimal quantity QOptimum is less than the market equilibrium
quantity QMarket.
Externalities of Smoking
Combine Figure 2 and Figure 3, we can get the externalities of smoking, which is illustrated by Figure 4.
In this figure, both the externalities of smoking in supply and demand have been internalised. The social optimum equilibrium is the intersection of
Social Cost Curve and Social Benefit Curve.
The Ban on Smoking in Public Places
In order to deal with the market failure, policy makers can enact some regulations on smoking such as tax increase on cigarettes, restriction on sales
and ban smoking in specific places. All these regulations on smoking can be classified into two types: price–based policies and non–price–based
polices measures, and ban on smoking in public places is a non–price–based polices (Goel and Nelson, 2006). How does the restriction in public places
works? As we have discussed above, policy makers can fix the market

Pesticide Pollution
Fertilizer and pesticide usage has increased dramatically worldwide, especially in China. Twenty years of uncontrolled economic development have
created serious, chronic air and water pollution. In order to support China's growing population, the country has drastically increased its usage of
fertilizers and pesticides in the agricultural sector. China consumes around a third of global fertilizers, with rapid growth in use in recent years, driven
largely by higher fruit and vegetable production. Excessive use of chemical fertilizers and pesticides threatens both public health and agricultural
productivity. Many farmers choose to use chemicals to keep weeds and pests from destroying their crops while adding more nutrients to the soil. Yet
such benefits do not come without environmental costs––namely the pesticide pollution of China's streams, rivers, lakes, and even coastal areas, as
these toxic chemicals runoff into nearby waterways, contaminating the food, drinking water causing massive health problems.
While fertilizers and pesticides, as stated above, provide economic benefits for the farmers in terms of increasing yields; but also provide adverse
impacts. These impacts on the environment are called "negative externalities." According to researchers, "not many measures are being taken in order
to enforce safe, organic, and healthy fertilization. If a good has a negative externality, then the cost to society is greater than the cost consumer is paying
for it." Since

Introduction To Externalities

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