Negative externalities

Key Questions

• What is a negative externalite?

  Answer:

  Externalities are events or effects that affect an activity without relating to it - directly or not.

  Explanation:

  For example, we can say that 2015 April's tornadoes in Southern Brazil were negative externalities for, let's say, agriculture. There, many crops and fields were damaged. How could the farmers there predict or get prepared for a tornado? Ok, there might be prevention policies and so, but do people keep waiting for such event day and night, everyday? I don't think so.

  Another example: pollution and waste on rivers/seas for fishermen. Their core acticity - fishing - is not at all related to the causes of pollution and environmental waste. But there they are: facing a decrease in number (and, why not, in quality) of 'production' (fishes) due to an unrelated (to fishing) event!

  Guilherme N. · 4 · May 12 2015

• Why is it possible that negative externalities lead to inefficient overproduction?
• What is a negative externalite?
• Does the existence of externalities indicate a market failure?
• How can a situation like the tragedy of the commons be corrected?
• Why can requiring payment for use of public services and goods prevent a tragedy of the commons?
• Why are negative externalities bad?
• What leads to negative externalities?
• Are negative externalities necessarily intentional?
• What is the definition of an externality?
• How can an externality be negative?
• How does fracking create negative externalities?