- Not in my backyard
-
Externalities, or the effect of economic activity on a third party, can lead to undesirable consequences like pollution. Oil spills, like the one caused by British Petroleum in the Gulf of Mexico in 2010, are a prime example. Even though BP and its customers each benefit from the production of oil, others along the Gulf coast had their lives severely disrupted.
-
-
The Fishing Game
- 0
- Lecture Clips
-
Traffic Jam
- 0
- Music
-
Erin Brockovich
- 0
- Film Clips
-
Downeaster Alexa
- 0
- Music
-
-
-
Four Types of Goods
- 0
- Office Hours
-
-
-
Sprint Commercial
- 0
- TV Clips
-
Dog Days
- 0
- TV Clips
-
-
-
Erin Brockovich
- 0
- Film Clips
-
-
-
The Fishing Game
- 0
- Lecture Clips
-
-
-
Traffic Jam
- 0
- Music
-
Downeaster Alexa
- 0
- Music
-
No Man's Land
- 0
- Music
-
Light Pollution
- 0
- Music
-
Real World Examples
-
Congestion Charges
In 2003 London instituted a congestion charge. Motorists entering the charge zone pay a flat rate of 8£ (approximately $12) between 7am and 6pm. A computerized scanner automatically bills the driver, so there is no wait at a toll booth. When the charge was first enacted it had an immediate effect. The number of single vehicles entering the zone fell by a third, riders on public buses increased 15%, and bicycle use rose by 30%.
Because congestion charges become part of a motorist’s internal costs, they cause motorists to weigh the costs and benefits of driving into congested areas. In other words, congestion charges internalize externalities.
-
Deforestation in Haiti
Nothing symbolizes the vicious cycle of poverty in Haiti more than the process of deforestation. Haiti was once a lush tropical island, but today only about 3% of the country has tree cover. A number of factors contributed to this environmental catastrophe: shortsighted logging and agricultural practices, demand for charcoal, rapid population growth and increased competition for land. Widespread deforestation caused soil erosion, and as a result, land that was once lush and productive became desert-like. Not enough food could be produced which contributed to widespread poverty.
Haiti is an extreme example of the tragedy of the commons. In Haiti, the land was a semi-public resource that was overused and abused and therefore subject to the tragedy of the commons.
Students, got an econ question?
- Who's Dirk?
- More on the man, himself. Meet Dirk
- Econ Media Library
- Check out multimedia tools, videos and more in our Media Library