Classification of externality, Public Economics

Classification of Externality

Keeping in view the nature of the problem, externality may be classified into four broad types:

  1. Relevant externality- when the unconcerned parties are affected by an activity and the parties in turn demand for suitable solution to reduce its effect;
  2. Pareto relevant externality - in the process of appropriate solution to the problem, affected parties are made better off without adversely affecting any one;
  3. Static and dynamic externalities - in a static situation, a group overexploits the natural resource by imposing externality on others (for example, over-fishing), while in a dynamic case, the exploitation would be on such natural resource which has high future value (for example, fishing of juvenile fish species); and
  4. Pecuniary externality - an activity which imposes higher price or lower cost on people or land (location of huge business, industry in a particular area).

The disposal of public bad under normal course is done in various forms through natural resources media like air, water and land by treating earth as a natural sink. In the process of disposal, if the pollution load of public bad exceeds the assimilative capacity of the natural resource, it will impose serious problem by impairing the ecological balance. Hence, the main issue is how to abate pollution to the required level in order to keep both living and non-living organisms in good health and prosperity.

 

Posted Date: 12/18/2012 6:18:22 AM | Location : United States







Related Discussions:- Classification of externality, Assignment Help, Ask Question on Classification of externality, Get Answer, Expert's Help, Classification of externality Discussions

Write discussion on Classification of externality
Your posts are moderated
Related Questions
how wage increase of fixed income groups'' will affect the overall economy? what are effects exactly?

Normal 0 false false false EN-IN X-NONE X-NONE MicrosoftInternetExplorer4

Types of production function


reallocation of the resources from 1 efficient point to another efficient point that cause the production of x increase and production of y decrease hold the condition of contrect

The structural interdependence, in fact, forms the basis for the policy maker's choice behaviour for policy or policy mixes. The spectrum formed by various policy mixes depends on

Normal 0 false false false EN-IN X-NONE X-NONE MicrosoftInternetExplorer4


In the context of hospital care, explain and distinguish between occupancy rate, capacity, and utilization.

Discuss whether high indirect taxes are the best way to discourage smoking.