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建立人际资源圈Understanding the concept of externality in economy--论文代写范文
2016-05-05 来源: 51Due教员组 类别: 更多范文
51Due论文代写网精选代写范文:“Understanding the concept of externality in economy”。这篇论文的主要目的是了解外部性的经济概念，外部性是在其健康的环境中影响一个人或组织的活动，例如旁观者。简单来说，外部性涉及双方的关系。这意味着外部性旨在理解副作用包括与其他各方相关的成本和收益。然后它帮助经济学家试图知道外部性内化成的区段业务决策过程。因此，经济外部性是一个非常重要的理论来分析经济实体和环境之间的关系。
Externality is too difficult to fully understand. Till now, the concept of externality is also not defined well by the economists. There, it could explain the externality as an impact of one person or organization’s activities on its wellbeing surroundings, for example bystanders. Simply, the externality involves two sides’ things which relates with the relationship. One is economic entity, and other is bystander or society. It means that the externality is intended to understand the side effects including costs and benefits that relates with other parties. Then it helps the economists try to know the extents of externality and internalize it into business decision-making processes. Thus, in economic externality is a very important theory to analyze the relationship between economic entity and the environments.
How to define the concept of externality? The problem is not really explained by many economists. Generally speaking, there are two kinds of definitions. One is based on the subjects who cause the impacts of externality, such as Paul A. Samuelson (2005) and William D. Nordhaus (2004). They defined the externality as impacts of one organization’s actions including production or consumption which need not to be compensated for costs or benefits by someone (Fischer, 1987). Basically, the producers and consumers in the externality analysis do not bear all of the costs or do not reap all of the benefits of the subjects’ actions. For instance, usually manufacturing such as steel company, chemistry factory and battery factory will cause environmental pollution which will imposes costs on others. While for example the planting forests could keep the soil and clean the air to improve the environments of nature. And other is based on the bystanders which mainly accept impacts. According to Randall Alain’s definition, externality is an inefficient phenomenon when some benefits or costs occurred out of the consideration of decision-makers. In other words, the benefits are gave or costs is added compulsively to the people who do not attend the decision making process.
Usually, according to the above definitions and impacts of externality, there are two mainly types of externality according to Samuelson (Fischer, 1987). They are positive externality and negative externality. When the impacts of externality on the business environment are adverse or harmful, the externality is called negative externality such as automobile exhaust, cigarette smoking, barking dogs and chemistry leakage and steel industry. All of these actions are cause harms or pollutions and need other extra costs to compensate. While the positive externality brings beneficial impact on others party and the environments (Externality, 2005). For example, immunizations, restored historic buildings, research into new technologies and sciences, and planting forests are benefit to society and environments. It is widely encouraged by organizations, environment associations and the governments.
Over the years, companies are purchasing the benefits and creating many externalities such pollutions of water, air and ecology. While, these kinds of negative externalities usually costs society a great deal but costs the companies nothing. Thus, the problems of negative externalities are created inevitably since the producers usually neglect the negative influence for their business environment. As a result, it causes inefficiency in society.
Urgently and essentially, now the wanted task is to effectively solve the problems which is brought by the externality and significantly internalizes the cost of externalities into business’s decision-making processes. To solve the problems of externalities, the government firstly tries to force companies to internalize the externality costs into their decision-making process. Milton Friedman argued that the government could force the companies to pay for the costs of environment tax, pollution taxes and fees while producing (Baumol, 1972). For example, in Europe the companies such battery factory, steel factory and mobile companies should pay for extra environment taxes every year. Otherwise, the government could plan some incentive and penalty regulation measures to reduce the impacts of negative externalities. It intends to improve the realization of environmental harmony.
In addition, what other techniques might be used for internalizing the cost of externalities into business's decision-making processes? Firstly, it is possible to encourage these companies to carry out self-regulation measures while making the decisions. For example, the steel company will cause great water pollutions and create negative externalities. To solve it, the company could make extra pollution-control laws and increase the polluted-water process before releasing. Secondly, the externalities could be solved by the cooperation of organizations through trading relationship. This relationship is based on the resource requirements for each partner. One company could purchase the essential materials through pollution quota from other companies which cause the materials as a waste. Thus, the two companies create the cooperative relationship which fulfills their supplies. Thirdly, the company which causes the externalities would sign or reach some agreements through the way of negotiation to regulate the conflicts among the externality acceptors. Fourthly, the companies could keep the total amount of pollution and apply a kind of tradable pollution permits. This permit could be transferred from low-pollution companies to high-pollution companies through the free market of pollution authority.
Need to explain, these solutions will not be efficient if the companies could not make the determination to reduce the negative externalities and improve positive externalities. If the companies are required to pay for the pollution tax and extra costs, it is said that the companies will compare the total costs and the incomes in order to determine whether the production is profitable while making the decisions. At this time, the externalities maybe want the government to control the regulation forces (Internalizing costs, 2003). It is said that the government could regulate behavior or internalize the process of decision-making of companies and also directly issue the pollution permits in a way of enforcement.
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