Negative externalities examples noise vehicle exhaust

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Negative Externalities : Examples Noise, vehicle exhaust, acid rain, ozone depletion caused by chlorofluorocarbons (CFCs), global warming due to greenhouse gases (carbon particles from fossil fuel combustion, etc.). Positive Externality : Examples research and innovation, neighbor’s nice backyard, Immunization. 5
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Types of Externality Externality can be production or consumption depending on whether the externality is caused by production or consumption activities. Examples of production externality : A paper factory dumping its waste to the river. Example of consumption externality : Cigarette smoking in the classroom, Drinking and driving. 6
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Consider a paper factory that pollutes the environment during its production process. The marginal cost of the factory’s production = MC (denoted as MC P in the text). In the production process it emits pollution that harms the environment, the marginal external cost caused by each extra pollution = MEC (denoted as MC g in the text). Then the total marginal cost of production including the external cost, marginal social cost, MSC (denoted as MC s in the text) = MC + MEC. Inefficiency of Competition with Externality 7
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