jak67m
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Report Thread starter 11 years ago
#1
what is this? give me a definition please ?
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Prince Rhyus
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#2
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Think pollution.

Back in the day when everyone was polluting everything, the non-monetary costs of production were borne by the environment.

But as time went on, society and Government decided to do something about environmental pollution - in particular from industry. In various cases it was a case of "use cleaner technology or we'll shut you down"

As a result, firms had to pay to use that cleaner technology in order to protect the environment where they would otherwise want to carry on as normal - thus internalising the external non-monetary costs of production.
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jak67m
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#3
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thank u very much
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Raptorshark
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(Original post by Prince Rhyus)
Think pollution.

Back in the day when everyone was polluting everything, the non-monetary costs of production were borne by the environment.

But as time went on, society and Government decided to do something about environmental pollution - in particular from industry. In various cases it was a case of "use cleaner technology or we'll shut you down"

As a result, firms had to pay to use that cleaner technology in order to protect the environment where they would otherwise want to carry on as normal - thus internalising the external non-monetary costs of production.

Hmm, I'm a little shakyon this topic too.

Doesn't it have anything to do with the expansion of property rights? For example, by defining exactly who owns the air which is being polluted, you can set up some form of compensation for the firms who are polluting to pay.

EDIT: Wait, I understand now. Internalising the externality is basically the government doing things to increase the marginal private cost of the production of consumption of a good or service so that the curve is moved upwards and the socially optimum level is met (?)
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fred777777777777
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I think im pregnant
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michelle.ho54
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(Original post by fred777777777777)
I think im pregnant
same
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