1. This course is prepared under the Erasmus+ KA-210-YOU Project titled
«Skilling Youth for the Next Generation Air Transport Management»
Sustainability
Management in Aviation
The economic perspective – ‘Externalities’ and
environmental policy – Part II
Prof. Dr. Frank Fichert
Worms University of Applied Sciences
2. Examples for positive externalities:
(Privately owned) historic building, car, aircraft, …
(if bystanders can see it without paying a fee)
Fundamental research (results can be used by everybody)
…
The economic perspective – Part II 2
Externalities
3. Some other externalities:
‘Pecuniary’ externalities:
Effects within markets
(e.g. more (potential) buyers might increase or reduce the price of a good)
Might be relevant with respect to air transport, e.g. as indirect effect:
Better connections might bring more tourists (hotels etc. benefit)
Network effects (externalities):
Number of ‘members’ of a network matter (e.g. telephone network)
Might be relevant with respect to air transport, esp. hub-and-spoke systems.
The economic perspective – Part II 3
Externalities
4. Why do externalities cause a market failure?
The economic perspective – Part II 4
Externalities
=> Sust Material 02-01 provides some basic information about the functioning of a market
and the usual way markets are analyzed in economics.
If you are not familiar with economics, this might help you to better understand the next
set of slides.
If you are familiar with the economic analysis of markets, you might directly continue with
video/slides ‘Sust S/V 02-03’
