Question

Please provide a real world example of positive externalities and an example of negative externalities. For either case, is the government trying to address it? If so, how? Also, is the market for nicotine products efficient? (consider the assumptions of perfect information and no externalities). Don't forget to comment on at least one of your classmates' postings.

Answer 1

Training and education can be considered as an example to the positive externality as this would serve as a benefit to the society as well whereas pollution can actually be considered as a negative externality on the whole. For education since it's a positive externality the government subsidizes the education and in case of pollution the government taxes the companies in this way both the times the government is trying to address it. the market for nicotine products is not efficient because nicotine is considered to be a harmful drug which is actually a negative externality to the country.