Positive And Negative Externalities

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Externalities occur when producing or consuming a good cause an impact on third parties not directly related to the transaction. . Externalities are sometimes referred to as 'by-products', 'spillover effects', 'third-party effects' or 'side-effects', as the generator of the externality, either producers or consumers, or both and impose the costs or benefits on others who are not responsible for initiating the effect. Externalities can either be positive or negative. They can also occur through the production or consumption of goods. Negative Externality: A negative externality is a cost that is suffered by a third party as a result of an economic transaction. In a transaction, the producer and consumer are the first and second parties, and third parties include any…show more content…
initiative of “Waste Management System” in different cities of Pakistan. Before beginning of this project, people used to throw trash on roads which causes different atmospheric problems and health issues. So it was a negative externality which is affecting other individuals by one individual. The trash on roads also gives birth to different bacteria’s and health prone diseases. The animals who eat from the trash also transfer the bacteria’s from one place to another. Moreover, the trash also affects the environment by polluting the air. Hence it was a negative externality for the economy. But the government took accurate step and started the project of “Waste Management System” which is currently working in different areas of city and reducing the level of negative externality which is prevailing in the economy. This project is a positive externality because due to one individual, other individuals or organizations are getting benefit. The “Lahore Waste Management System” is currently working in different areas of Lahore and collecting trash from different places to make the environment clean and to reduce the negative externality

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