lectur1-page14 - This student begins to have labored...

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In a competitive market system such as ours, property rights have been established to facilitate the exchange of commodities, and reduce the resources required to protect private property. Property rights are often constrained by the enactment of legislation due to the realization of a “negative externality” The best way to explain this concept is through an example. Lets take a look at second hand smoke. A person has bought a pack of cigarettes. The cigarettes are now their private property. They pull out a cigarette in class, and start smoking; exercising their right to use their private property. However, a member of the class has asthma.
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Unformatted text preview: This student begins to have labored breathing associated with the onset of an asthma attack. I have to stop class and call public safety to transport this student to the ER for treatment. Another student in class is allergic to cigarette smoke. Their eyes start watering, their nose becomes congested, and they are generally uncomfortable and find it hard to concentrate in all their classes the rest of the day. The smoker has imposed a negative externality on these two individuals and the class as a whole while exercising their private property rights. 14 Another example would be a producer that pollutes the environment....
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This note was uploaded on 12/29/2011 for the course ECO 210 taught by Professor Malls during the Fall '10 term at SUNY Stony Brook.

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