Search the forum,

external

In economics, an externality is an indirect cost or benefit to an uninvolved third party that arises as an effect of another party's (or parties') activity. Externalities can be considered as unpriced goods involved in either consumer or producer market transactions. Air pollution from motor vehicles is one example. The cost of air pollution to society is not paid by either the producers or users of motorized transport to the rest of society. Water pollution from mills and factories is another example. We are all made worse off by pollution but are not compensated by the market for this damage. A positive externality is when an individual's consumption in a market increases the well-being of others, but the individual does not charge the third party for the benefit. The third party is essentially getting a free product. An example of this might be the apartment above a bakery receiving the benefit of enjoyment from smelling fresh pastries every morning. The people who live in the apartment do not compensate the bakery for this benefit. The concept of externality was first developed by economist Arthur Pigou in the 1920s. The prototypical example of a negative externality is environmental pollution. Pigou argued that a tax, equal to the marginal damage or marginal external cost, (later called a "Pigouvian tax") on negative externalities could be used to reduce their incidence to an efficient level. Subsequent thinkers have debated whether it is preferable to tax or to regulate negative externalities, the optimally efficient level of the Pigouvian taxation, and what factors cause or exacerbate negative externalities, such as providing investors in corporations with limited liability for harms committed by the corporation.Externalities often occur when the production or consumption of a product or service's private price equilibrium cannot reflect the true costs or benefits of that product or service for society as a whole. This causes the externality competitive equilibrium to not adhere to the condition of Pareto optimality. Thus, since resources can be better allocated, externalities are an example of market failure.Externalities can be either positive or negative. Governments and institutions often take actions to internalize externalities, thus market-priced transactions can incorporate all the benefits and costs associated with transactions between economic agents. The most common way this is done is by imposing taxes on the producers of this externality. This is usually done similar to a quote where there is no tax imposed and then once the externality reaches a certain point there is a very high tax imposed. However, since regulators do not always have all the information on the externality it can be difficult to impose the right tax. Once the externality is internalized through imposing a tax the competitive equilibrium is now Pareto optimal.
For example, manufacturing activities that cause air pollution impose health and clean-up costs on the whole society, whereas the neighbors of individuals who choose to fire-proof their homes may benefit from a reduced risk of a fire spreading to their own houses. If external costs exist, such as pollution, the producer may choose to produce more of the product than would be produced if the producer were required to pay all associated environmental costs. Because responsibility or consequence for self-directed action lies partly outside the self, an element of externalization is involved. If there are external benefits, such as in public safety, less of the good may be produced than would be the case if the producer were to receive payment for the external benefits to others.

View More On Wikipedia.org
  1. J

    external oil boiler question

    We are buying a bungalow with an external oil boiler. We plan to build an extension, will we need to move the boiler or can it remain where it is meaning it would be then housed in the extension Thanks
  2. W

    External Home Stopcock

    HI, Closing the internal house Stopcock located under the sink eventually stops water flowing from the kitchen tap or washing machine hose when these are left open. However, if the tap/ hose is closed, with the stopcock still isolated and left for several minutes then there is another stream...
  3. P

    Firebird Silverpac External Oil Boiler suitable for internal use?

    Hello. I'm hoping to get some advice. I moved into a new build house a few years ago. A Firebird Silverpac external oil boiler (kabin pak type) was installed which is situated on top of the detached garage base - I've now decided to build the garage meaning the boiler will be now be located...
  4. T

    Willis style external element

    Hi All, just popped over from the sparky forum to get an opinion on something.... Need to heat a standalone plastic bath tub to normal bathing temp and maintain it indefinitely. Not a plumbed system, totally stand alone. Considering using a Willis style external element and having the normal...
  5. J

    External frost stat is in action or not doing anything?

    Hi, I have an external frost stat which I am not sure if it is in use or not. I had an electrician opened it and checked it, he said it is live. But he is not sure if it is in action or not.... I took a photo, could anyone confirm as the position it is, is this frost stat in action i.e. will...
  6. J

    Gas fire with external gas pipe

    Hi all, My customer has a gas fire with an external gas pipe (runs across the front of the fire - see pic). He'd like a new gas fire. No chance of re-running the pipe through the chimney opening. Any ideas of a gas fire that would suit? I've looked at a few, but would like the gas connections...
  7. P

    What external Air admittance valve would you recommend?

    Hi I want to fit an external air admittance valve to a new stack pipe, see picture. Does anyone have a particular recommendation. Many thanks Paul
  8. IanHoll

    External Controller Wiring

    I recently had a Worcestershire Bosch 8000 Lifestyle installed but they also installed the inferior ESI control panel and wireless thermostat. I've just purchased Worcestershire Bosch's CT-200 EasyControl with the RF key. The app is paired with both the RF key and the thermostat and I can see...
  9. M

    Firebird external oil boiler locks out when cover is on.

    Hi All, I have a Firebird Enviromax external oil boiler, it has a Riello RDB2.2 C26 burner which keeps locking out. It has been an ongoing problem, where I've had to call my local guy several times. He gets it going, but it doesn't stay working for long. Its costing me a fortune for his time...
  10. M

    Fitting an external tap at a commercial premise

    I have been asked to fit an external tap at a mental health facility to enable the external paths to be hosed down. What form of back syphoning measure is sufficient for this installation?
  11. R

    Roast my external waste stack

    Hello one and all. Neighbours had a builder over this afternoon for a quote on their new conservatory. They thought we were out and the subject turned to our external waste stack in the back garden. It was recently fixed there to remove the internal waste stack from our small bathroom. Anyway...
  12. G

    External pipes below ground level

    Hi not sure if this is the correct place for this, but does anyone know what these pipes are around 1foot below ground level, not sure if it’s tied in with the house plumbing system in any way at all. My property is only below ground level at one side as each house in the street is on a slope...
  13. M

    External drain pipe

    Hello. Please check the pic. As u can see the drain pipe goes into the plastic grate. Is this right? Or should the pipe sit over the grate. It just bugs me a little. Many thanks.
  14. I

    What are you using to move external oil boilers

    I would like to know what you guys use to move external oil boilers into position. Due to covid my supplier was unable to deliver a boiler recently so i collected it myself with a trailer. The boiler was loaded onto trailer with forks and when I arrived at the property I had to negotiate the...
  15. M

    LOGIC COMBI 24 EXTERNAL PIPE LEAKING

    Hi all, Boiler has been losing pressure for overnight for a couple of days. Was at a loss, but have just found this on the pipe loop outside of the house in line with where the boiler is sited. What is its purpose? Second pic is where I presume the pipe comes from. It connects to the very Last...
  16. A

    Will an external thermostat allow me to set two different temperature for water/heating?

    Hello team, first of all, I apologise if this isn't the right section of the forum to ask, if so, please dear moderator, move the thread! I am here to ask help as I just moved in a new house where I have a boiler that doesn't allow me to specify the temperature for water or for the heating but...
  17. L

    Fire valve external oil boiler

    Bit of help on the regulations please? An external oil boiler (metal case) sited outside the house but contained in a slightly larger wooden enclosure (foot bigger in all directions, ie not a shed). Would it be acceptable to place the fire valve inside the wooden enclosure?
  18. P

    External 15mm pipe insulation

    Hi lads and lasses sorry if this has been covered before but i couldn't fins anything on it. Im installing an outdoor tap and for the first time the pipework has to be external. Im fitting it to water regs standard with all the rubbings internal pipe sleeved out the wall then runs down 3 meters...
  19. eagleeye

    External boiler flues

    Would anyone be able to tell me if a Vaillant flue can be run vertically externally? I know you can with Viessmann and Worcester but cant remember about Vaillant Thanks
  20. H

    Do I need an External Bypass Valve

    Hi I'm hoping someone can help me out. I have a POTTERTON PROMAX COMBI 28 HE PLUS A boiler which the manual states that the boiler utilises the primary side of the DHW plate heat exchanger as an automatic integral bypass. I'm about to fit a Honeywell system which will place a TRV on all the...
Creating content since 2001. Untold Media.

OFFICIAL SPONSORS

OFFICIAL SPONSORS

Back
Top
AdBlock Detected

We get it, advertisements are annoying!

Sure, ad-blocking software does a great job at blocking ads, but it also blocks useful features of our website. For the best site experience please disable your AdBlocker.

I've Disabled AdBlock