Question

Using a minimum of 3 approved sources (articles from major news outlets, academic journal articles, NOT Wikipedia nor similar websites), post an original 4-5 well-developed paragraph response to the questions below by Feb 18th at 11:00pm and respond to at least two classmates' responses by Feb 21st at 11:00pm. Source documentation should be parenthetical (e.g. Smith 2010) and a list of sources in full bibliographic format must be included at the end of the initial post. Research a good or service that creates a positive or negative externality. Research a good or service that creates a positive or negative externality. Explain the good or service and the corresponding externality that it creates. Propose a form of command and control intervention to correct this externality or explain one that already exists. If there is existing command and control intervention, does it correct the externality problem? How well? Propose a market-based solution that would fix for the problem rather than command and control intervention. Evaluate the expected effectiveness of your market-based solution compared to government intervention. Based on your analysis, do you think it is appropriate for the government to make decisions on our behalf and reflect those decisions in their policies? In formulating your answer, consider the circumstances under which such intervention may or may not be appropriate.

Answer 1

Government Intervention Discussion Board

Research a good or service that creates a positive or negative externality.

Explain the good or service and the corresponding externality that it creates.

Propose a form of government intervention to correct this externality or explain the form of government intervention that already exists.

If there is existing government intervention, does it correct the externality problem?

Propose a market-based solution that would fix for the problem rather than government intervention. Evaluate the expected effectiveness of your market-based solution compared to government intervention.

Based on your analysis, do you think it is appropriate for the government to make decisions on our behalf and reflect those decisions in their policies? In formulating your answer, consider the circumstances under which such intervention may or may not be appropriate.

          ANSWER:-----

               Many scientific studies had linked passive smoking to a range of cancers and respiratory diseases.It is becuase of the ill effects of smoking to third parties like serious helath threatning diseases, environment quality de gradataion, polution etc., passive smoking has been considered more dangerous than active smoking. Second-hand smoke also leads to premature births, asthma, and numerous health problems in children.

              From various different articles (the link of some of the articles are given below in the end of the answer) published in New York Times and BBC News, a particular good has been identified that create negative externalities.

              The good, the consumption of which impose external costs on third parties outside of the market for which no appropriate compensation is paid, is tobacco products like cigarettes.

               Various several government interventions have been made to correct the negative externalities being imposed in the case. Some of them are as allows:

• Hawaii has passed a bill that makes it the first state to raise the smoking age to 21 from 18.  Violators would be fined $10 for the first offense. Subsequent offenses would lead to a $50 fine or mandatory community service.
• California pioneered smoking bans in the workplace, and later in restaurants and bars.
• New York City has banned smoking in public parks and plazas.
• Center for Tobacco Products, a division of the Food and Drug Administration created in 2009, will soon have regulatory authority over other tobacco products, including electronic cigarettes, which have become enormously controversial even as they have gained in use.

              Rather than government intervention if market based approach is used the followings may help to correct the probles.

• Price mechanism: payment including an estimate of social cost.
• Internalizing the externality

              MOst of the interventions are not cause of success. For example consider refulations on public smoking, The externality argument fails because indoor smoking creates, at worst, a pecuniary externality. Several other reasons may include corruptions and non adherence to law. Although few regulations like Hawaii step to increase the age limit may prove a haelp to reduce the externalities.

              The market solutions do not provide effective measures when compared to government regulations. Several problems occurs in market corrective mechanism such as hold out problem, estimation of social cost, free rider problem etc.

               Hence in case of the tobacco products like cigareettes it is appropriate for the government to make decisions on our behalf and reflect those decisions in their policies.