Negative Externality Microeconomics

One of the negative externalities: Air Pollution

One of the negative externalities that directly affects me is air pollution created by industries as they manufacture things for consumption. There is a small oil refinery nearby that emits a lot of pollutants into the air during the day. The other is a closely linked negative externality: in order to facilitate access to the oil refinery, the local government constructed a new road so that trucks can bring in crude and export out the processed product. The local authorities had to damage the gorgeous environment leading up to the site in order to build the road. The economic outcome associated with the surplus in the refinery is that the excess has to be taken to a new refinery next to the sea and this cases more air pollution by the big trucks.

The need for Government Intervention

It is only the government that can intervene because the pollution is very huge and my personal efforts cannot remedy the situation. It requires huge amounts of money (Arnold 384). Government intervention is necessary so that it can impose some pollution charges and the money received can be used to plant a surrounding forest that can act as a carbon sink for the huge carbon emissions from the plant. In the case of the road, the government can charge a toll fee for all the trucks operating in the region and use it to build a park for us who have been affected by the destructions by the new road. Through investment in the surrounding society, some benefits would be transferred to the immediate community that has suffered the brunt of the investment as Coase theorem of benefit transfer outlines.

Work Cited

Arnold, Roger A. Microeconomics. Mason, OH: South-Western Cengage Learning, 2010. Print.

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