The Automobile and the Environment :: Business and Management Studies

The Automobile and the Environmenta) Negative externalities are impacts on outsiders that aredisadvantageous to them. The externalities occur where the actions offirms or individuals have an effect on the people other thanthemselves. In the case of negative externalities the external effectare be on other people. They are also know as external costs.There may be external costs from both takings and consumption. Ifthese are added to the private costs we get the total social costs. Anexample of negative externalities would be the side effects ofproduction processes e.g. the pollution (noise, dust, vibration)endured by people living next to a quarry.b) From flavor at the data we can see that since 1974 the cost ofpublic beam has increased quite rapidly relative to the base rateof ascorbic acid compared to the cost of go which has steadily decreased.Initially it was the real cost of motoring which increased only if by 1975it had started to decline and continued to do so until th e late1970s. It wherefore increased quickly for a short pointedness until 1982 endingup just above the base rate and be there until 1985. It thensteadily declined up until 1994. Public transport on the other handhas been increasing since 1974. The real cost of rail decease hasincreased steadily with a few dips ending up in 1994 at just oer 165.The real cost of bus pass away has also increased over the 20 year peakbut more gradually with a sharp rise in 1988 followed by a fall in1990 but then a last increase ending up in 1994 at just over 140.c) The fact that the cost of oil/petrol fell over the 20year period of1974-1994 and the cost of public transport rose is why there is such abig gap between them. The cost increases and decreases could havehappened for a number of reasons. The cost of petrol decreases whensupply is greater than demand or when demand is low. Transport costscould have rose if the demand is in addition great for it or to increasegross for councils/governmen t. If public transport postulate to bemodernised/repaired than also putting the prices up enables extrarevenue to spend on these things.d) The classic way to adjust for externalities is to tax thosewho gain negative externalities. This is sometimes known as makingthe polluter pay. The government require to assess the cost to asociety of a particular externality. It then sets tax rates on thoseexternalities equal to the value of the externality. This increasescosts to customers by shifting the supply curve to the left.