Question

Finance & Real Estate Open Ended Question:

Many zoning laws have a rule that when a developer provides a positive externality for the neighborhood, for example by creating a park, they can build extra floors on their building. Do you think this is fair? Explain.

Answer 1

A positive externality is a scenario in which a real estate developer will be gaining in terms of some extra facilities which will not be expensed by the real estate developers it can be seen in this scenario that there are positive externalities provided to the real estate developer in order to benefit the society so that this will be leading to promotion of ethical practices and corporate social responsibility.

In this case, it can be seen that developer is building extra floor on their building for creating a park which is a type of positive externality and these type of positive externalities are good in order to promote corporate social responsibility among organisational and other associations and they will be motivated to perform their duty towards the society and act in best interest of the stakeholders so I think these kind of practices are good even though it is leading to a positive externality as they are trying to provide some additional services to the society and they are gaining in terms of rules and regulations liberation or relaxations. So, these are fair practices in order to promote societal expenses for businesses and promote the protection of interest of stakeholders.