Question

Pollution can be thought of in a public goods framework or an externality framework. How are these approaches similar? How are they different?

Answer 1

Pollution can be seen as a negative phenomena that is caused by either humans or occurs theiugh natural actions.

Viewing it as a part of public good framework can be justified as it is a thing which is non- excludable i.e. as it occurs it affects all the people of the area equally, irrspective of any levels or standards. Also it is an externality as pollution is a third product which is produced during the production or manufacturing process and even this affects the people around the area equally irrespective of any standards.

The dissimilarity between the public good framework and externality can be brought out as: an externality can be positive as well as negative whereas pollution is always negative and will have always negative impacts on the surrounding.