Blog
Externalities - Video Clips
28th January 2008
I have been introducing the economics externalities and market failure to my Year 12 students this week and have found that selective use of the BBC news audio-visual library provides some vivid examples of the divergence between private and social costs and benefits. Here is a brief selection of BBC news audio-visual clips relating to negative externalities. Please do suggest some more by adding a comment! BTW these clips cannot be downloaded from our blog / site, you will have to stream them over the web using media player or another programme!
In explaining the idea of externalities I define them as third party ‘spillover’ effects arising from production and consumption of goods and services for which no appropriate compensation is paid
They can cause market failure if the price mechanism does not take into account the full social costs and benefits of production and consumption. Externalities occur outside of the market i.e. they affect economic agents not directly involved in the production and/or consumption of a good or service
Brighton road sweeper dumps effluent onto a residential street (pretty blatant example!)
Time wasting calls for 999 services
Toxic waste contaminates a Greek town
China’s air pollution is growing
Government health campaign on second hand ‘passive smoking’
One of my students asked a perceptive question in class this afternoon - whether we as taxpayers and consumers are experiencing externalities arising from the credit crunch and the run on the bank at Northern Rock. To the extent that the excessive lending to the sub-prime market in the States and the badly holed business model of Northern Rock has made it harder for all of us to get credit and that taxpayers have been left to foot the bill for keeping Northern Rock afloat, I thought there were externalities involved.
Bryn’s excellent AS Economics blog also provides some excellent examples of externalities and market failure. Try this link to his blog.
Geoff Riley
Geoff Riley FRSA has been teaching Economics for over thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.