Question

Explain what externalities are. Give at least two examples of positive and negative externalities to a new downtown stadium for the Columbus Crew.

Answer 1

Answer- Externalities refer to the affect on third parties by a transaction between two parties and such third parties are not relted to the parties in the transaction. Such externalities can be positive and nagative. Positive externality is when die to the transaction between two parties the third party gets an external benefit for example- A park in your area or a graden in your neighbour which gives you emmence pleasure and fresh air to breathe. While on the other hand a negative externality is a external loss that occurs to the inrelated third party for example- setting up of industries in the area and creating air pollution and noise as well.

Two examples of positive externality for a downtown stadium for the columbus crew are as follows-

• Due to building of such huge stadium the tax revenues pf that area can oncrease and also it will provide jobs to multiple workers. This will improve the evonomy of that area in the country as a whole. Better standard of living for those workers.

• A new stafium could attract the crowd and thus people will come and the tourist in the area would increase, which would ultimately lead to an increase in the demand for food, taxis etc. Thus, making the area popular and attractive.

Two examples of negative externality for a downtown stadium for the columbus crew are as follows-

• building of the stradium would increase the traffic level around the area. Due to such increase in traffic the air pollution and noise pollution level will Increase thus, leading to bad environment health.

• Another negative externality could be that due to building of such a stadium huge amount of loan would be taken and it would lead to payment of huge anount of interest as well. Also public money may be involved which might be used someplace else for a better pupose like building homes for the poor.