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(a) Explain what negative externalities are, and why there may be a case for government intervention to address them. Describe some of the ways to correct the negative externalities and the pros and cons of each method. Provide real life examples.
(b) Choose a case study from your home country where an externality exists in a current market. Using the key characteristic of four market structures identify the type of market structure in your case study (ie. monopoly, oligopoly, perfect competition or monopolistic competition). Illustrate the situation with externalities in your case study and the resulting deadweight loss in a diagram and discuss ways that your government has addressed the presence of negative externalities in the market.
(c) Suggest other options for dealing with negative externalities in your case study. Outline the economic reasons for your suggested options.
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