{"id":7061,"date":"2017-09-29T06:54:50","date_gmt":"2017-09-29T06:54:50","guid":{"rendered":"http:\/\/blogs.bath.ac.uk\/edswahs\/?p=7061"},"modified":"2017-09-29T06:54:50","modified_gmt":"2017-09-29T06:54:50","slug":"externalities-and-arthur-pigou","status":"publish","type":"post","link":"https:\/\/blogs.bath.ac.uk\/edswahs\/2017\/09\/29\/externalities-and-arthur-pigou\/","title":{"rendered":"Externalities and Arthur Pigou"},"content":{"rendered":"<p>Uncosted externalities are seen as a huge problem these days, and the issue must have been around for a long while, if not for ever. \u00a0The Economist had a series of articles last week in which externalities \u00a0were explored along with the work of\u00a0Arthur Pigou who proposed ways of addressing them. \u00a0The synopsis is <a href=\"https:\/\/www.economist.com\/blogs\/economist-explains\/2017\/09\/economist-explains-economics-2\">here<\/a>, and begins:<\/p>\n<blockquote><p>MARKETS are supposed to generate a magical state, where nobody could do better without somebody else doing worse. Awkwardly, they often fail. The reason is that those directly involved in a transaction are not the only ones affected by it. A drive into the centre of town, for example, creates congestion for everyone else; a company dumping waste into a river poisons the downstream drinking water; carbon emissions warm everyone\u2019s planet. Economists have a special name for these extra costs: they are \u201cexternalities\u201d. Unfettered market prices do not take them into account. \u00a0...<\/p><\/blockquote>\n<p>The main article is <a href=\"https:\/\/www.economist.com\/news\/economics-brief\/21726709-what-do-when-interests-individuals-and-society-do-not-coincide-fourth\">here<\/a>. \u00a0It begins:<\/p>\n<blockquote><p>LOUD conversation in a train carriage that makes concentration impossible for fellow-passengers. A farmer spraying weedkiller that destroys his neighbour\u2019s crop. Motorists whose idling cars spew fumes into the air, polluting the atmosphere for everyone. Such behaviour might be considered thoughtless, anti-social or even immoral. For economists these spillovers are a problem to be solved.<\/p>\n<p>Markets are supposed to organise activity in a way that leaves everyone better off. But the interests of those directly involved, and of wider society, do not always coincide. Left to their own devices, boors may ignore travellers\u2019 desire for peace and quiet; farmers the impact of weedkiller on the crops of others; motorists the effect of their emissions. In all of these cases, the active parties are doing well, but bystanders are not. Market prices\u2014of rail tickets, weedkiller or petrol\u2014do not take these wider costs, or \u201cexternalities\u201d, into account. \u00a0...<\/p><\/blockquote>\n<p>All very informative. \u00a0I found the part on\u00a0<em>internalities<\/em>, to be particularly interesting. \u00a0Unlike externalities, which tend to affect us in a general sense, internalities are at the heart of who we are and how we live our lives.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Uncosted externalities are seen as a huge problem these days, and the issue must have been around for a long while, if not for ever. \u00a0The Economist had a series of articles last week in which externalities \u00a0were explored along...<\/p>\n","protected":false},"author":237,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[2,4],"tags":[],"class_list":["post-7061","post","type-post","status-publish","format-standard","hentry","category-comment","category-news-and-updates"],"acf":[],"jetpack_featured_media_url":"","jetpack-related-posts":[],"_links":{"self":[{"href":"https:\/\/blogs.bath.ac.uk\/edswahs\/wp-json\/wp\/v2\/posts\/7061","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.bath.ac.uk\/edswahs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.bath.ac.uk\/edswahs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.bath.ac.uk\/edswahs\/wp-json\/wp\/v2\/users\/237"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.bath.ac.uk\/edswahs\/wp-json\/wp\/v2\/comments?post=7061"}],"version-history":[{"count":0,"href":"https:\/\/blogs.bath.ac.uk\/edswahs\/wp-json\/wp\/v2\/posts\/7061\/revisions"}],"wp:attachment":[{"href":"https:\/\/blogs.bath.ac.uk\/edswahs\/wp-json\/wp\/v2\/media?parent=7061"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.bath.ac.uk\/edswahs\/wp-json\/wp\/v2\/categories?post=7061"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.bath.ac.uk\/edswahs\/wp-json\/wp\/v2\/tags?post=7061"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}