A recent report show that nitrogen pollution from farms, vehicles, industry and waste treatment costs the EU up to £280bn (320bn euros) a year. It contributes to air pollution, fuels climate change and is estimated to shorten the life of the average resident by six months. Livestock farming is one of the biggest contributors of nitrogen pollution and less meat eating could have a significant effect on the levels of emission. The report calls for greater controls on the methods of farming and the use of farming equipment.
Tasks: Nitrogen pollution is an example of a negative externality.
a. Can you illustrate the impact on price, output and social welfare of a negative externality?
b. What do you think is the best way to intervene and reduce negative externalities?
http://www.bbc.co.uk/news/science-environment-13025304
http://www.businessgreen.com/bg/news/2042506/nitrogen-pollution-costs-europe-gbp280bn
This article is an example of situation where there is a negative externality of production where a good or service creates external costs that are damaging to third parties. This is when the producers deal with great amount of loss. As it is visible, the MPC of the firm are below the MSC because there is an extra cost to society caused by the pollution that created by the firms itself. The firm will only be concerned with its private costs and will produce more than the Q* which is socially efficient output and therefore it will lead to market failure where the welfare results loss. To reduce negative externality, the government could legislate and could ban the polluting firms, or strict there output in some way. It could also pass laws relating to measurable environmental standards in the firm’s production units. Therefore to meet the standards, the firms would have to spend money, thus increasing their private costs. The government could also issue tradable emission permits and give license to firms to create pollution up to set a level. The government then allocates these permits in individual firms. Thus each firm now has a quota of emissions that it is allowed to produce.
ReplyDelete-Ayushi Dugar and Ka young Kang
In this article, it looks at the negative externality of production where it creates an external cost for a good or service. This cost effects the third party. The impact of this is mostly on the producers as they deal with great amount of loss. The marginal producers cost is below the marginal social cost as the producers has an extra cost due to pollution, to the society in this article. The organisation or firm will only look at their private cost, thus resulting in producing more which in turn will lead them to market failure where there will be a welfare loss as the firm will be producing more than they are suppose to. To help reduce the negative externality the government may intervine, to make strict laws against pollutions, or the firms could be heavily taxed if they are polluting. They could also ban the firms who are polluting all together. This will lead to only the firms who don't pollute the enivironment that much, therefore leading to meeting the standards set by society.
ReplyDelete-Paavni Mathur
This article clearly shows a negative externality of production. If this is shown graphically, the MPC is below the MSC due to the more pollution. The firm will have to increasable their MPC in order to solve this issue but when this is achieved a market failure will be observed due to the welfare loss created.
ReplyDeleteIn order to fix this problem, the government could impose laws against pollution. Or each firm could be given a limited amount of pollution they are allowed to release in a given period of time.
This article is all about the pollution which is due to the nitrogen pollution from farms, vehicles, industry and waste. this is also affecting the producers as they are having loss.
ReplyDeleteThis is effecting the environment.
This article shows the negative externality of production.
The government can control this by restricting some thing and making some laws for the firms. They should be allowed to realease limited amount of waste.
This article can act as a typical example of a situation where the consumption of a good and its production can lead to a negative external effect that is harmful for the society. Due to the fact that the private producer will make the product with regard only to the marginal private cost, not the marginal social cost, which leads to the price being lower than it should be for the benefit of the society. This further means that demand will be more than the demand should be for the society's benefit, which occurs at the socially optimal level.Social welfare will decrease for private welfare to increase. The best course of action to reduce the externality itself would be to advertise the products in a negative way, or to actually ban the product and not approve it for consumption. This would force the firm to take the society into account and accordingly develop a product that is more beneficial for the society.
ReplyDeleteThis article talks about negative externality of production which is due to the nitrogen pollution from farms, vehicles, etc. The government can stop them by making rules and regulations which will help save the environment. Every firm must only be allowed to produce a limited amount of waste per day hence forcing firms to reduce the waste which would eventually reduce pollution levels and thus would be better for the society.
ReplyDeleteThe definition of a negative externality is that it has a negative impact on a third party (which is neither consumer nor producer). Individual consumers are not only affected in the sense that the air pollution may cause health problems that they have to pay for in terms of going to the health centrea but also, not being able to work (in an extreme case) makes them pay. The economy also has to pay a price for this negative externality. First of all, as already mentioned, huge sums of money are needed for the waste treatment. And if this air pollution causes health issues to citizens then the government expenditure on health treatment may increase. This money would come from taxes that the government recieves - whish is likely to decrease if employment falls due to health issues (in a hypothetical situation). In the article it has been mentioned that less meat eating could lower the levels of emission so the government could invest in negative advertisement - advertising to people that they should eat less meat. It's possible that incentives will be required, so another option could be to give school an incentive to serve only vegetarian food in schools. All in all, meat eating can be lowered and so can the levels of emissions.
ReplyDelete