There are many negative and positive externalities in the world today. An externality is the cost that is imposed on a third party whether it is a positive or negative. Obviously a positive externality most people are not going to complain about because this will have a positive effect on the third party. A negative externality on the other hand is not so good the third party is negatively affected and may not be able to do anything about but complain. We are going to explore 3 different scenarios 2 that are a positive externality and one that is a negative externality. The positive externalities we will explore are a beekeeper and the positive effect his bees will have, the second is replacing your front lawn with nice artificial turf. The negative externality we will explore is a fishery over fishing in the ocean and the impact it will have on another company.
The first positive externality we will explore is the beekeeper and his bees. Normally a beekeeper will keep bees for their honey this creates a positive result for the beekeeper. His bees will create honey that he can then sale to consumers for a profit. The positive externality that is produced from the beekeeper and the bees is the farmer. In order for bees to make honey they collect pollen from different flowers and plants which then creates a cross pollination effect. The Farmers crops will be pollinated from the bees flying from plant to plant collecting pollen. This saves the farmer from having to manually pollinate their crops. With the crops being pollinated by the bees this helps them to be healthier and produce more food.
The second positive externality we will explore is installing artificial lawn in the front yard of a house. In a normal situation a house would have grass in there front lawn in order to keep the grass growing and looking
good you would need to water the grass and mow the grass regularly. Both of these actually create a negative externality for the neighbors, the lawn mowing creates noise pollution that the neighbors cannot get away from, the watering of the lawn will use valuable resources that can be used for drinking and other vital elements. A home owner can take these negative externalities and make them positive by installing a nice high end artificial lawn. The new artificial lawn will create 3 positive externalities first being it makes the house look nice which reflects positively in the neighborhood and helps increase home value prices. The second positive effect is with an artificial lawn there is no need for mowing so there is no noise pollution to bother the neighbors. Finally with the artificial lawn you don’t have to water the lawn and take up valuable resources from the environment.
The final externality we will look at is a negative externality and that is fishery over fishing in the ocean. When a fishery sends out a large fleet of boats to fish a certain area for fish they can start to talk a large portion of the fish in the area and leave little resources for other fisheries. This means a smaller company may not be able to obtain fish to sale at market and make a profit for the company. One way to help solve this negative eternality is for the government to impose that the larger company can only have so much fish and then have to leave the area or they can impose a tax on the amount of fish a particular company catches.
As you can see all three externalities will affect three parties whether it is a positive or negative externality. With the beekeeper the three parties affected are the beekeeper, the bee, and the farmer and all three have a positive influence. For the artificial lawn the three parties affected are the homeowner, the environment, and the neighborhood. Finally for the negative externality the three parties affected are the larger fishery, the environment, and the smaller fishery.
Courtney from Study Moose
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