Classification of externality, Public Economics

Assignment Help:

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.

 


Related Discussions:- Classification of externality

Summary of green accounting, Normal 0 false false false ...

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

Nations of the commonwealth, The international monetary fund and the World ...

The international monetary fund and the World Bank are the main lending financial institutions that give assistance to developing nations in the restoration of their economy. Wh

Define heterogeneity, Q. Define Heterogeneity? We know that breaking of...

Q. Define Heterogeneity? We know that breaking of the assumptions of homogeneity of agents, in welfare economics, makes it difficult to define social welfare function. Breakin

Lower tax bracket., Jenna's boss has decided to pay her a one-time bonus o...

Jenna's boss has decided to pay her a one-time bonus of $5,000. She decides to save the money until she retires, 4 years from now. She contemplates two savings options. Option A is

Policy agenda for the next decade, While getting introduced with various co...

While getting introduced with various concepts, it would strategically be unfair to venture in to the analysis of on going policies unless a reasonable conceptual coverage has been

Cost-based methods - indirect opportunity cost, Normal 0 false ...

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

Possibility of foreign aid in exchange, This question considers the possibi...

This question considers the possibility of foreign aid in exchange for favors. Suppose nation A has RA resources in its treasury and nation B has RB resources. The winning coalitio

Economic outcomes, Suppose that economic outcomes can be classified as eith...

Suppose that economic outcomes can be classified as either good or bad. Governments differ in ability and this affects the likelihood of good outcomes. There are two types of gover

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd