Question

In the movie "Poisoned Waters" what are some externalities and coase theorem that took place?

Answer 1

In the film "POISONED WATERS",Pulitzer Prize- winning journalist HEDRICK SMITH examines the growing hazards to human health and the ecosystem.Hedrick Smith examines the rising hazards to human health and the ecosystem, and why its so hard to keep our waters clean.

The waterways are still in a hazardous condition,even if there are many ACTS to protect our water resources.they facet the threat of newer sources of contamination by effluents from industryand uncaring attitude of people .the overflow of polluted substanceflowing to the rivers from industry,agricultural,and huge infrastructure development continous unabuted.

The matter at stake is the increasing hazardous to human health and ecosystem in which living being live in.The description by Smith is an eye opener that reveal the excess flow of storm water and agricultural waste from large chicken farms.The effluents also include the chemicals released by the manufacturers of the Fast Moving Consumer Goods(FMCG)

The investigation of Poisoned Waters has a far reaching impact on the huge waterways in America and highlights the perils they are in as of now.A new wave of pollution is spreading thatb is responsible for killing fish and causes mutation in frogs a poses big threat to human health.

Externalities arise whenever the actions of one economic agent make another economic agent worse or better off, yet the first agent neither bears the costs nor receives the benefits of doing so:

Example: a steel plant that pollute a river with its waste.

Negative production externality: When a firm’s production reduces the well-being of others who are not compensated by the firm.

example:steel plant pollutes a river but plant does not face any pollution regulation (and hence ignores pollution when deciding how much to produce)

* Environmental Externalities: The contribution of driving to global warming is directly proportional to the amount of fossil fuel a vehicle requires to travel a mile.

PRIVATE-SECTOR SOLUTIONS TO NEGATIVE EXTERNALITIES: COASE THEOREM:

• The COASE THEOREM   states that when transaction cost are low, two parties will be able to bargain and reach an efficient outcome in the presence of an externality.

Coase Theorem (Part I): When there are well-defined property rights and costless bargaining, then negotiations between the party creating the externality and the party affected by the externality can bring about the socially optimal market quantity.

Coase Theorem (Part II): The efficient solution to an externality does not depend on which party is assigned the property rights, as long as someone is assigned those rights.

COASE THOREM EXAMPLE :

Firms pollute a river enjoyed by individuals. If firms ignore individuals, there is too much pollution