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Externalities_Presentation

This PPT explains externalities in public economics, highlighting their types, characteristics, and impact. It gives positive examples like education and public health, and negative examples like air pollution and traffic congestion in India. Finally, it shows the role of government in managing externalities through taxes, subsidies, and regulations.

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Externalities_Presentation

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  1. Externalities in Public Economics https://www.indiaassignmenthelp.com/finance-assignment-help-india Positive & Negative Examples (India Context)

  2. What are Externalities? • Externalities occur when the actions of individuals or firms affect others without being reflected in market prices. • Types: • - Positive Externalities (benefits) • - Negative Externalities (costs)

  3. Characteristics of Externalities • 1. Spillover effects on third parties • 2. Not reflected in market transactions • 3. Can be positive or negative • 4. Lead to market failure

  4. Positive Externalities - Definition • A positive externality arises when an activity provides benefits to others who are not directly involved in it.

  5. Positive Externality Example (India) • Education: • - An educated population contributes to higher productivity. • - Promotes innovation and social development. • - Benefits society beyond the individual learner.

  6. Another Positive Example • Public Health: • - Vaccination programs reduce disease spread. • - Healthier communities increase economic output. • - Individual action benefits society at large.

  7. Negative Externalities - Definition • A negative externality arises when an activity imposes costs on others who are not directly involved in it.

  8. Negative Externality Example (India) • Air Pollution: • - Caused by vehicles, industries, stubble burning. • - Leads to health problems and environmental damage. • - Cost borne by society, not just polluters.

  9. Another Negative Example • Traffic Congestion: • - Excess vehicles cause delays and fuel wastage. • - Increases stress and economic costs. • - Burden falls on entire community.

  10. Government Role in Externalities • 1. Taxes and subsidies • 2. Regulation and standards • 3. Public provision of goods • 4. Awareness campaigns

  11. Conclusion • Externalities are key to understanding public economics. • - Positive externalities bring social benefits. • - Negative externalities impose social costs. • Government intervention is essential to correct market failure.

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