For instances, it is essential for the government to put in place some rules and regulations that will ensure that some actions that cause adverse negative effects are reduced. Involvement of the Government in ExternalitiesĪn externality is known to result in a state where resources are not efficiently allocated, and that calls for government intervention to help limit the adverse effect of externalities. This is a positive externality because it results in the benefit of those of us who have not taken part in beautifying our properties. The fact that the neighbor has worked hard to improve its property making it more pleasing has led to the increase in the value of the properties in the neighborhood including ours. For instance, one of my neighbors has decided to design a highly attractive compound and the surrounding, which has made the area look so attractive. Besides, the negative externality, there is the positive externality that takes place when the outcome results in benefits for those not involved (Gregory 10-1c). Additionally, the air population generated from the cars and factories in one way or the other affects my health. An example of the negative externality that I have personally faced is the time costs that are caused by the slowing down of cars due to the vehicles that enter congested freeways. An externality is divided into negative and positive externality where negative externality takes place when an activity such as consumption or production creates costs, which can be discomfort or harm, for those not involved (Gregory 10-1b). In fact, the word externality is a word that comes from the word external, which implies that someone external to the activities or transaction is affected by the consumption or production of the good. Market failures result to what is referred to as externalities and externality occur when one’s actions, which can be production or consumption, affect the well being of those who are not but of the production or consumption.
0 Comments
Leave a Reply. |
Details
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |