Positive externality - Revision history

Jmdonev: 1 revision imported

2026-07-02T20:55:27Z

1 revision imported

← Older revision	Revision as of 20:55, 2 July 2026
(No difference)

energy>Jmdonev at 17:51, 25 June 2026

2026-06-25T17:51:08Z

← Older revision		Revision as of 17:51, 25 June 2026
Line 1:		Line 1:
	[[Category:Done ~~2017~~-07-01]]		[[Category:Done 2026-07-01]]
	<onlyinclude>Economists use the term '''externality''' to describe any time the price determined by a market doesn't reflect the true [[cost]] of an action. A positive externality is a good consequence that isn't taken into account.</onlyinclude>		<onlyinclude>Economists use the term '''externality''' to describe any time the price determined by a market doesn't reflect the true [[cost]] of an action. A positive externality is a good consequence that isn't taken into account.</onlyinclude>

Line 24:		Line 24:

	To increase the level of education, the government could offer an education [[subsidy]] which would lower the cost of education and encourage more people to obtain a higher level of education. This would close the gap between '''P<sub>1</sub>''' and '''P<sub>2</sub>''' and increase the output of higher education. Therefore the individuals could pay the same price before (accompanied by a subsidy) and the overall level of education would increase and maximize the social benefit.		To increase the level of education, the government could offer an education [[subsidy]] which would lower the cost of education and encourage more people to obtain a higher level of education. This would close the gap between '''P<sub>1</sub>''' and '''P<sub>2</sub>''' and increase the output of higher education. Therefore the individuals could pay the same price before (accompanied by a subsidy) and the overall level of education would increase and maximize the social benefit.

			==See Also==
			*[[Negative externality]]
			*[[Monopoly]]
			*[[Market failure]]
			*[[Equity]]

	==References==		==References==
	{{reflist}}		{{reflist}}
			[[Category: Uploaded]]

Jmdonev: 1 revision imported

2017-08-29T01:47:28Z

1 revision imported

← Older revision	Revision as of 01:47, 29 August 2017
(No difference)

Jmdonev at 20:51, 17 August 2017

2017-08-17T20:51:16Z

← Older revision		Revision as of 20:51, 17 August 2017
Line 1:		Line 1:
	[[Category:Done ~~2016~~-04-30]]		[[Category:Done 2017-07-01]]
	<onlyinclude>Economists use the term '''externality''' to describe any time the price determined by a market doesn't reflect the true [[cost]] of an action. A positive externality is a good consequence that isn't taken into account.</onlyinclude>		<onlyinclude>Economists use the term '''externality''' to describe any time the price determined by a market doesn't reflect the true [[cost]] of an action. A positive externality is a good consequence that isn't taken into account.</onlyinclude>

	An '''externality''' is an effect that an economic transaction has on a party who is not involved in the transaction. <ref>~~Investopedia.~~ "~~Externality.~~" ~~[Online]~~, ~~Available~~: ~~http://www.investopedia.com/terms/e/~~externality.~~asp?ad=dirN&qo=investopediaSiteSearch&qsrc=0&o=40186~~ [~~Aug 17~~, ~~2016~~].</ref>		An '''externality''' is an effect that an economic transaction has on a party who is not involved in the transaction. <ref name=Ox_econ>"A Dictionary of Economics", entry: externality, published Oxford University Press, 2013. Edited by John Black, Nigar Hashimzade, and Gareth Myles Online version accessed [August 17th, 2017].</ref>

	Externalities deter a market from producing the equilibrium quantity and price for a good for service. Externalities produce inefficiencies in markets and can eventually produce a [[market failure]] if not internalized in time.		Externalities deter a market from producing the equilibrium quantity and price for a good for service. Externalities produce inefficiencies in markets and can eventually produce a [[market failure]] if not internalized in time.
Line 8:		Line 8:
	==Positive Externality==		==Positive Externality==

	~~<onlyinclude>~~A [[social benefit\|positive externality]] is something that enhances society as a whole. It results from an economic transaction that has positive external effects on others not party to the transaction.~~<onlyinclude/>~~		A [[social benefit\|positive externality]] is something that enhances society as a whole. It results from an economic transaction that has positive external effects on others not party to the transaction.

	One example of a positive externality is the market for education. The more education a person receives, the greater the social benefit since more educated people tend to be more enterprising, meaning they bring greater economic value to their community.<ref>J.Black, N. Hashimzade, and G. Myles. (2009) "Externality." [Online], Available: http://www.oxfordreference.com/view/10.1093/acref/9780199237043.001.0001/acref-9780199237043-e-1134?rskey=tR8JO1&result=5.</ref>		One example of a positive externality is the market for education. The more education a person receives, the greater the social benefit since more educated people tend to be more enterprising, meaning they bring greater economic value to their community.<ref>J.Black, N. Hashimzade, and G. Myles. (2009) "Externality." [Online], Available: http://www.oxfordreference.com/view/10.1093/acref/9780199237043.001.0001/acref-9780199237043-e-1134?rskey=tR8JO1&result=5.</ref>

Jmdonev: 1 revision imported: From the summer

2016-09-17T22:29:44Z

1 revision imported: From the summer

← Older revision	Revision as of 22:29, 17 September 2016
(No difference)

Jmdonev at 18:09, 26 August 2016

2016-08-26T18:09:59Z

New page

[[Category:Done 2016-04-30]]
<onlyinclude>Economists use the term '''externality''' to describe any time the price determined by a market doesn't reflect the true [[cost]] of an action. A positive externality is a good consequence that isn't taken into account.</onlyinclude>

An '''externality''' is an effect that an economic transaction has on a party who is not involved in the transaction. <ref>Investopedia. "Externality." [Online], Available: http://www.investopedia.com/terms/e/externality.asp?ad=dirN&qo=investopediaSiteSearch&qsrc=0&o=40186 [Aug 17, 2016].</ref>

Externalities deter a market from producing the equilibrium quantity and price for a good for service. Externalities produce inefficiencies in markets and can eventually produce a [[market failure]] if not internalized in time.

==Positive Externality==

<onlyinclude>A [[social benefit|positive externality]] is something that enhances society as a whole. It results from an economic transaction that has positive external effects on others not party to the transaction.<onlyinclude/>

One example of a positive externality is the market for education. The more education a person receives, the greater the social benefit since more educated people tend to be more enterprising, meaning they bring greater economic value to their community.<ref>J.Black, N. Hashimzade, and G. Myles. (2009) "Externality." [Online], Available: http://www.oxfordreference.com/view/10.1093/acref/9780199237043.001.0001/acref-9780199237043-e-1134?rskey=tR8JO1&result=5.</ref>

==Effect of Education on the Market==
[[File:Positive Externality- Graph.png|450px|thumb|right|Figure 1. The effect of higher education on society.<ref>A. Goolsbee, S. Levitt and C. Syverson. ''Microeconomics'', 649.</ref>]]
The social benefit (SD) of obtaining higher education is greater than that of the private benefit (D). Because individuals do not factor in the social benefit, they are only interested in the private benefit and therefore they purchase a level of education which is not socially optimal.
*At '''Point A''' the level of education is below the socially desirably level and confers only a private benefit to the person.
*The '''red triangle #1 & #2''' represent the [[deadweight loss]] that results from this decision not to obtain a socially desirable educational level.
*At '''Point B''' the level of eduction increases as does the cost.
*The increase in education creates a benefit beyond just the private benefit to the person, this is called the '''external marginal benefit (EMB)'''.
*The EMB is the amount of benefit that is conferred to society as a result of the higher level of education.
*The '''red triangle #1''' represents the [[deadweight loss]] that results from this decision to obtain a socially desirable educational level. It is only half the amount from before.
*This deadweight loss exists because in a perfect market, every person would obtain the exact level of education that they need but because this is almost impossible to do it is better to have everyone over-educated.

To increase the level of education, the government could offer an education [[subsidy]] which would lower the cost of education and encourage more people to obtain a higher level of education. This would close the gap between '''P<sub>1</sub>''' and '''P<sub>2</sub>''' and increase the output of higher education. Therefore the individuals could pay the same price before (accompanied by a subsidy) and the overall level of education would increase and maximize the social benefit.

==References==
{{reflist}}