28 | Cost to Bystanders
A negative externality, or external cost, is a cost of a transaction paid by bystanders who were not consulted, and whose interests were not taken into account.
This video is an introduction to externalities, including the concepts of private cost, external cost, and social cost. Using the example of antibiotics and viruses, we take a look at how costs are passed along to different members of society beyond the producer and consumer.
What can the flu teach us about economics and externalities? In this video, we go over how vaccines produce positive externalities that help people stay healthy.
If Art sells potato chips to Betty, both Art and Betty are happy with the transaction. Betty has chips, and Art has been paid for them.
If Art sells potato chips to Betty, both Art and Betty are happy with the transaction. Betty has chips, and Art has been paid for them. If Betty eats her chips loudly and it irritates Carl, then Carl bears a cost because of Art and Betty's transaction. Carl didn't have anything to do with the sale of the chips, but now he has to listen to them crunching. The cost Carl bears is called an externality. It is a cost that affects someone outside of the transaction. Prof. Michael Munger explains how externalities can arise and some options for resolving them
When NPR's reporting team traveled deep into the Amazon rain forest to report on the environment, they took planes, a truck, and a motorcycle. Lots of fuel was burned. Lots of carbon was emitted. They felt guilty. In the process of reporting on the environment, were they making the problem worse?
If Art sells potato chips to Betty, both Art and Betty are happy with the transaction. Betty has chips, and Art has been paid for them.
If Art sells potato chips to Betty, both Art and Betty are happy with the transaction. Betty has chips, and Art has been paid for them. If Betty eats her chips loudly and it irritates Carl, then Carl bears a cost because of Art and Betty's transaction. Carl didn't have anything to do with the sale of the chips, but now he has to listen to them crunching. The cost Carl bears is called an externality. It is a cost that affects someone outside of the transaction. Prof. Michael Munger explains how externalities can arise and some options for resolving them
When NPR's reporting team traveled deep into the Amazon rain forest to report on the environment, they took planes, a truck, and a motorcycle. Lots of fuel was burned. Lots of carbon was emitted. They felt guilty. In the process of reporting on the environment, were they making the problem worse?
Catching live fish using cyanide is easy. Crush a couple of sodium cyanide tablets into a squeegee bottle of water, dive around a coral reef, find a fish you fancy, and squirt the toxic liquid into its face. The mixture stuns the fish without killing it, making it easy to catch in a net, or even by hand.
Judge quashes order to repaint London house, in win for property developer who denied choosing colour scheme out of spite
Judge quashes order to repaint London house, in win for property developer who denied choosing colour scheme out of spite
This website is an excellent guide to understanding externalities.
Externalities are a form of market failure. Externalities are defined as the spillover effects of the consumption or production of a good that is not reflected in the price of the good. For example, the production of steel results in pollution being released into the air, but the cost of the pollution to the environment is not reflected in the price of steel.
This article analyzes data from many studies on the impact of big-box stores.
Year zero in the history of U.S. big-box stores was 1962: In that one year, the first Walmart, Target and Kmart stores opened. While the firms’ origins varied, their common focus was on deep discounts and suburban locations. Shoppers would arrive by car, not foot, so what mattered was highway access, acres of parking and massive scale.
In the nineteenth and early twentieth centuries, a smog settled over London. It was called the London Fog, or Pea Soup.
In the nineteenth and early twentieth centuries, a smog settled over London. It was called the London Fog, or Pea Soup. It was the result of factories and homes burning coal. But much of the cost was borne by third parties who earned nothing from the burned coal. Economist Arthur Cecil Pigou was among the first to explain the concept of such a "negative externality," and the first to suggest a way to deal with it.
Now, Pigou's insight is being used to fight climate change.
Why should nature be taken into account when looking at the economy as a whole? A Bee's Invoice uncovers and incorporates the hidden value of natural capital in the measurement of our economy.