A concept much beloved of economists is externalities. When an activity has an impact (negative or positive) on people who are not involved in it, that is known as an externality. Aabir is learning drumming. He practices for hours at home. The noise is a negative externality for the neighbors. Ayaan is an avid gardener. His front garden has awesome flowers. That is a positive externality for the neighborhood.
The concept of externalities was first systematically developed by British economist Arthur C. Pigou in his 1920 book “The Economics of Welfare.” Many economists, but not all, consider the presence of externalities to be a “market failure” and recommend government intervention to correct that failure. Is government intervention a good idea? Are there other ways of addressing the problem? Continue reading “Negative Externalities”
Atanu Dey : Life is a Random Draw 