Negative Externalities

[antbubb]

lol, this video isn't just for A2 students. It has helped me revise negative transport externalities for my MSc Transport Degree. So thanks!

[chloeannewatts1]

paj. you are a god!

[xL1LT1G3Rx]

Phil explains it so well i feel like i am cheating on my exam when i watch his videos! hehe! :)

[k1r2t1e]

thankyou soo much didn't have a clue in class what this was

[marshmallowww1]

my economics teachers spend most lessons playing your videos and eating crisps

[AvalyanMedia]

i wonder who the hell disliked the video >:|

[rowa3ify]

Love your videos! I'm taking IB economics and we were told that there are two different graphs for negative externalities of consumption and production, you only have one...? which is it? i'm confused



[TheMitchmaestro]

Hahahaha Paj > My economics teache

[DreadAces]

@TheMitchmaestro Paj > every economics teacher.

[arb4bmus4]

omg paj i love you. you save my life for every test. my teacher is nothing compared to you.

never stop making videos:) hope to meet you one day

[student92sa]

how do we find the deadweight loss triangle, please could you explain in detail for both positive and negative externalities from production as well as consumption point of view.

[Shehoomustnotbenamed]

I'm doing GCSE Economics and i am a bit confused :( the costs that separate social costs and the entire costs from private costs. What does that mean? Can someone give me a watered down definition with a simple example? Economics doesn't come easy to me -.-

[doofeeeee]

You're a great teacher :)

[soemali]

THANK YOU SO MUCH, this question came out in my paper today. you really are my savior. looking forward to more videos from you!

[raja1994]

I love you man! You just helped me a zillion times over with your videos. I finally know what welfare loss is now! Its the cost of a market failure, and to reduce market failure, a government has to intervene, through one of various methods i.e. taxation, to reduce the size of the market failure or erradicate it completely.

Much love!

[jrrictservices]

Hi, your videos are amazing! thank you sooooo much. is it possible to have a MSB and MPB shift on a negative externality of production diagram or do they not make sense on a diagram?? thanks

[TomWilson1993]

LIFESAVER

[DannyMullenBjj]

I'm in my first micro econ class right now. Great video, a good supplement to my course.

[jjaakkobb]

Thank you very much, I found this and your other videos on externalities ( these are the ones I have watched so far) extremely helpful.

[bills6693]

Question- If a tax is introduced, does that also raise the marginal social benefit, as the tax is (thoretically) in turn spent on society by the government.

For example, the high tax on tobacco not only tries to reduce consumption but also provides a large income for gov which is good for everyone.

exam tomorrow afternoon lol a bit late :p

[zorgom2]

amazing teaching! i understand it now! :D

[alih15]

Surely thats wrong, you have put a tax on it, rasing their MPC, but this doesnt equal MSC therefore there is still a market failure and thus you havent corrected the martet at all? Ali A2 student

[pajholden]

@alih15 it is a correction as long as the size of the welfare loss created by the negative externality has been reduced. It does not have to be entirely removed to be a correction. The size of the tax will dictate how much the welfare loss gets reduced. A big enough tax could remove the welfare loss altogether.

[alih15]

@pajholden kk cheers man :)

[blazemk]

@alih15 I dont get people who argue with good teachers . You can never cover the entire social cost he just said that in the vid, it would make the product too expensive .

[yaluobud]

WoW Professor Phil,

Thanks for your lessons. They are such a great way to brush up on all that economic stuff from years ago that we have all forgotten. Love your style and clarity.

Cheers Andy

PS have you sorted out the "Greek Crisis Problem" yet?

[veshbaby]

im watching this and i have an exam in less than 2 hrs

[ErebusTV]

can you use supply and demand to show this? and just say that ''if we include external cost the supply curve will shift to the left''?

[pajholden]

@ErebusTV Hello- no you cannot use D and S curves - they are different things! You really have to think about the purpose of the curves and what points on the curves mean to realise the differenc between the two kinds of curves. Regards, PAJ Holden

[ErebusTV]

@pajholden Thank you sooo much i have been watching your vids and they have helped me soo much. cheers again

[MultiOpe1]

can you pls explain free market forces, i don't understand it.

[kittymeow225]

i don't know how much i watched your videos, and will

i will watch more and more

thanks

[nsand91]

Is that a deadweight loss ?

[IamEngli5h]

video freezes on 1.07 all the time D:

[dilz888]

Welfare loss to society.

is that also called

Dead Weight Loss?

[AHamzahH]

@dilz888 yeh

[someonestepmyfoot]

nice video. better than my school teacher!

[abXLinden]

thank you

[sugarcult28]

YOU ROCK hahaha thank you!

[onceinapinkmoon]

i hope you'll have some benefits when you post these videos. cause you're v v v v v v v v good and you're saving me. TYVM (:

[ilovewatermelon06]

i'll be reporting about market externalities and i don't understand it at all ! especially the graph. :[ can someone please help me?? :-/

[QHJFRD]

@ilovewatermelon06 If you still need help, send me a PM; I can help =)

[ilovewatermelon06]

i have a report about market externalities and i don't understand it at all! specially the graph. :[

i need help. :-/

[LetsBeChange]

A question about socially optimal size, this is really puzzling me!:

Say that the PMB and PMC curves have equal elasticities and the the SMC and SMB curves are shifted out by the same amount (the negative externalities are equal to the positive externalities). Socially optimal size would then have output at the same as the free market size, yet the price would be higher, indicating a loss of consumer surplus and thus welfare?

Wouldn't this be less preferable than the free market size?

Thanks

[jpat911]

just a question for somebody who wants to explain, is the vertical axis Costs OVER Benfits? Or is it Costs AND Benifits, if its the latter, then Im confused haha

[toshiba3200]

tomorrow i have AS level economins exam..!dese videos are best for revision..

My friend got pass only by viewin dese videos!

ThANKS for sharing!

[freebieapple]

thank you so much!!

[IcedEarth99]

Thank you very much from Cyprus! My confidence levels after seeing your videos have sky rocketed because i actually understand what I am plotting on the graph! I'm Alot more confident about The A* on Me GCE's today!! would instructional videos considered to be a positive externality, when the person watching it teaches what he's learned to someone who hasn't? :p

[intelgates]

Hey, come Maldives and teach us, we pay best salary for good teachers

$700 monthly+additional bonus my me =P

[tugacosta]

Thank you very much on such big help you have been giving us, if I might, do you teach an IBO school there in Athens, I went there for my easter holidays, it was great, pretty similar as Lisbon from where i am.. do you teach IBO schools? Looking forwards to see more of your videos on Public Provision, Private Subsidies and vouchers ... thank you very much for such big help here!

[Meed8809]

Waw , great teaching , if I am a president of some country I would make him my personal economic adviser lol

[pinkyshrimpy]

i really feel like i love you ! lol, you're saving me from failing with all your videos ! you should come to brazil and teach me :)

[saradani79]

best teacher ever.we need an online university

[becciboodles]

Thank you very much pajholden. Extremely helpful for a quick refresh before my exam tomorrow.

[eskiboy142]

Your videos have been used in my economics AS level class in London, England. They have been really helpful. My Microeconomic module is in 2 weeks and i still have questions about how you know which linear line is MPC or MSC for example. If you could give me a example question and explain this theory to me, i would be more than greatful. Thank you.

[jamespeacefrog]

very helpful pajholden. thanks for putting these up.

[doobie150]

Thank you very much for your video guide, I noted this down to the absolute last detail and it was difficult to understand at first but by the end of this I had a clear understanding of what a negative externality is. This is all thanks to the clarity of your explanation and your outstanding level of teaching. I cannot thank you enough for this, it means a LOT.

[Gniruks]

Great explanation of welfare loss, it helped me a lot... thanks

[pancakes825]

Hi, it's a great tutorial.

I don't really understand when to use the MSC and MPC curve...

As in I'm not sure if we're supposed to use it together when we're talking about externalities?

Thank you so much!

[jkachovec]

you displayed this concept better in 5 minutes than my econ professor did in an hour and a half of lecturing....THANK YOU!!

[delnorth]

I absolutely love your videos...it's helped me a great deal.

[liverpoool4lyf]

awesome u make a-level economics easier from london woooop!

[1828USMAN]

thanks holden you are my vertual teacher

usman from

Pakistan

[selfrealizedexile]

Would you then concede externality taxation to be merely wishful thinking?

[selfrealizedexile]

market eventually compensates when the time comes. What externality taxation seeks is an unattainable amount of market knowledge. This is the very same reason why centrally-planned economies underproduce because there is an overreliance on the ability of a man or small group to understand the price system, profit signals, and the infinite amount of information sent back and forth instantaneously from such a consolidated position.

[selfrealizedexile]

k, after finishing the video, I don't think you can say that the market completely ignores externalities indefinitely. You will have trades being made by traders who don't comprehend full effects, but the market does know the full effects as the conditions affected by externalities are the very same conditions that arrange costs of production, prices, and profits. You may get to a point where you have overproduction via distortion in information from an externality, however, the

[selfrealizedexile]

at how the ICC was bought off by railroad companies and then trucker companies, look at what the dept of energy does to gas prices, look at what public education and the decline in the American student, etc.

I could go on forever, sir. Is this the same gov't we're to expect to calculate complex, potentially unsolvable equations or do you have a magic gov't that has been hiding for 6,000 years of recorded human history?

Thank you for your time and if you choose to respond.

[selfrealizedexile]

consequences of the 'Great Society' policies here in America and the erosion of the black man, look at healthcare costs and medicare and medicaid, look at college tuition and gov't student loands, look at rent control and HUD and all the ill-kept apartments, look at illegalization of drugs and the organized crime that has grown from it, look at minimum wage and the teenage unemployment, look at the sugar tariff and high fructose corn syrup, look at how the Fed handled the Great Depression, look

[selfrealizedexile]

altogether, a great speed and agility to handle them while they're going on, and with great dept so that we can calculate (would you even posit completely?) their full effects.

You have to remember, we're talking about gov't here. If they could comprehend externalities on a deep level with tremendous speed and foresight, wouldn't they're budget projections be FAR more accurate and their programs more efficient with little to no unintended consequences?

Look at the unintended

[selfrealizedexile]

externalities like pollution when it gets to a point where consumers are literally purchasing cleaner air and cleaner environments?

You see, it's very easy to set up a very simple, isolated example of an externality to prove "markets can fail," which I find mislead as markets still comprehend the changing conditions effected by positive and negative externalities, but it becomes monumentally more difficult to calculate externalities with a foresight that prevents them from happening

[selfrealizedexile]

would like to see reimbursement for that; it's not just the creators of negative externalities who don't want something done about it. But, my question to you is is it preferable to put this power in the hands of gov't, deal with their infamous miscalculations, and pray that there is no crony capitalism going on

or

Do we just deal with the complex nature of complex market ripple effects and find solace in the fact that capitalism will eventually deal with accumulations of negative

[selfrealizedexile]

Hello, I was wondering if I could get your opinion on what would be the more preferable alternative policy with regard to externalities. Should the gov't tax (not so much regulate what can be built or bought) those goods and services that have an externality effect in order to seek to correct this "market failure" or, more properly put imo, failure of traders to realize the full scope of ripple effects on their trades. I can guarantee you a producer who has a positive externality on a group

[93sheda]

wat a teacher guys, i wish he could personally teach me, anyone knows what is he doing nowadays?

[pajholden]

Thanks, I am still teaching, in Athens Greece. I am available for birthdays, parties and economic crises.

[Dimapbs]

@pajholden what a come back :)

[grod805]

@pajholden Haha/ Well you're in the right place at the right time in Greece. Good luck fixing their economy.

[thearcanist]

@pajholden hehe, is that why your in Greece? they needed you for the economic crises? :)

[Abouzolof1]

@pajholden hi sir its me george from your business class

[rushilforever]

@pajholden amazing economics teachers with a sense of humor, brilliant :')

[bigrock123]

@pajholden lmao

[Ryanxclarke]

@pajholden wait ur in greece at the moment?..... well why dont u give them a hand?

[7887booboo]

Again a superb video. As a teacher you're videos are priceless to get across difficult topics to students.

Thanks Again

[beatricemarx82]

thank you!

[mentalblueskyseeker]

Can you kindly post a video on positive externalities diagram? Tks & happy new year.

[waveboi93]

I second that request!

[jamesandshawn]

You said that "there is no distinction between MPB and MSB in negative externality diagram". But what about negative consumption externalities which occur when the good is being consumed as opposed to being produced (e.g. smoking)? Wouldn't that show a difference between MPB and MSB in an negative externalitiy diagram? Thanks.

[3bdi14]

this makes much more sense than trying to read out of an economics book - thanks Mr.H

[gippsi]

GOD BLESS YOU! YOU SAVED MY LIFE!

[hippievans]

A brilliant video!! :) thank you very very much :)

[spritesevenup]

i've never understood this until now :)

[DoNePa]

no,no thank You!

[wizzlesticks]

you're a good friend to microeconomics. thanks again. :)

[NadiaMwa]

Thank you so much!!! :)

[NB2303]

Mr. Holden, could you do one on positive externalities? Thank you.

[minaina12345]

thank you for your video! it was really useful for my revision!

[MillionthUsername]

So you determine what is "socially optimum" by something other than what society chooses? That's fascinating.

I wonder what the external costs of a criminal gang imposing itself on society are? You should do a chart for that.

You could show us the failure of coercive monopolies to provide the proper amount and type of goods and services to society. Then you might conclude that such monopolies ought to be abolished by society since they are anti-social.

[fiqqyass]

no, THANK YOU!

[bronald78]

wowo was lost but now i am found, thanks alot i am gonna pass my exam now..!!

[shaydenbassist]

wow

im gna totally chop my economics assignment now!

thanks heaps!

[nouveauvingtdeux]

you saved me before my economics unit 4 exam today on fisheries policy if anyone wants to know BTW. Thanks Paj. You're a top bloke. cheers.

[ReIgNoFrAdNeSs]

I don't see how the tobacco industry (just as an example) produces negative externalities. I don't think you ever really justified any of the examples you gave.

[pajholden]

There are myriad negative externalities in both production and consumption of tobacco. Healthcare costs, litter, fire damage, forest clearance for tobacco plantations are just a few costs created by the production and consumption of tobacco, yet paid by third parties - not buyers and sellers of the product.

[D4Shawn]

If you mean health care costs paid for by a third party, then that is obviously a problem caused by government (not tobacco companies). Tobacco companies do not force people to pay for other people's medical costs. That is the direct result of government action (coercion). You are confusing an externality of government with an externality of tobacco production and consumption.

[D4Shawn]

As for litter and the cost incurd in it's removal, well... that is not a price covered by a third party. Rather, it is the price a property owner pays for the benefit of allowing smoking on their property. A cost (the cost of litter removal) is being exchanged for a benefit (the freedom to smoke).

[D4Shawn]

The issue of fire damage is a bit more complex, but essentially very similar. Again, this is a risk taken by the property owner. Since most fires start on government land due to the fact that it is poorly maintained (I know, I live in california where there are wild fires EVERY year), it's a little hard to take the smoking issue seriously (since there are much bigger fish to fry [than smokers] when it comes to fire prevention).

[D4Shawn]

As for forest clearance, I'm not sure what you are referring to, but I do know that tabacco companies do not have the power to force people to pay for tabacco production. It's probably safe to assume that you are really referring to an externality caused by government (and trying to blame it on tabacco companies). Just a guess...

[missmaz02]

I don't think at all that he was just referring to financial cost. Negative externalities can take the form of any sort of cost, monetary or otherwise. For example, a cost to me of your smoking is that I have to see cigarette butts all over the ground outside my house, or I have to clean them up. Or part of my taxes go toward paying my council to clean them up. That's the cost to me of you being a smoker.

I'm fairly sure he wasn't making an attack on the tobacco industry. Calm down.

[ReIgNoFrAdNeSs]

The externalities in question were categorized as "market failures".

The fact that someone steals money from you and forces you to pay for litter removal, is not an example of "market failure". It is an example of government coercion.

If by market failure, you mean the market failed to protect you from the government, well... that's because doing so would be illegal. The government makes the laws, so again, that wouldn't be market failure; that would be government prevention.

[papietube]

ouch!

[buddhalight100]

You and D4 Shawn just don't get it. Even people who don't study economics understand their is a social cost to smoking which is what a negative externalitie is . Do you guys work for the tobacco companies or something?

[ReIgNoFrAdNeSs]

If someone smokes, and gets sick as a result, that is a price that THEY pay (in exchange for the pleasure of smoking). If THEY then seek medical treatment as a result of their sickness, then THEY are paying for the service of medical care (which does not represent a COST to the care provider, but rather a BENEFIT [as the care provider earns a profit]).

That is how it works in the MARKET place. The only thing that changes that arrangement is THE GOVERNMENT.

[buddhalight100]

Not sure where you live but where I live society pays the cost of smokers clogging up the hospital system for smoking related diseases. So you are wrong, it is a cost to society and nobody makes a profit out of it except wages for people who look after them..

[PanzerDivisionBOM]

In the absence of a state which forcefully redistributes property, there would be no mechanism for cost externalization, and that social cost would quite literally be a private cost. Therefore, negative externality is clearly not a market failure.

E.g, if you were to damage yourself by smoking, and no state would make other people pay for your treatment, then you alone would pay the price for your stupidity.

Even in legitimate charity, there's always a risk of subsidizing bad habits.

[DoUbLeUtEeEeFfFfF]

@ReIgNoFrAdNeSs

you should've learnt what negative externalities meant first before learning how to draw a diagram for -ve externalities. . .

[teejmd91]

@ReIgNoFrAdNeSs oh my god. dumbass.

[bhawksley13]

this is so good for revision....your voice is so soothing btw like my dads.x

[lukeozade69]

nice 1 thanks

[marinafriends]

yup... a video on positive externalities would be much appreciated!! :P thank-youu

[skarebsuper]

Thanks for the excellent video ! Would appreciate if you could post a video on positive externalities too

[molochoco]

Thank you VERY much for this!

[addrriannna]

Super!

[civver3]

Not really that bad. Though more examples and applications of the theory would have helped.

[Soph128]

Well I guess after all that revising on externalities was a waste of time but 'veilsider' your comment was well worth it : )

[mongoliandude]

Good luck to all us retards who are retaking unit 1 again 2morrow :)

[papietube]

lolll youu 222 buh its ma first year loollll

[papietube]

u 2

[01pb13837]

Soooooo helpful. Thanks.

[icumbloodisshit]

SSSSOOOO good, i gt as level exa tomoz and i didnt undersrand that at all b4 thnxxxx

[anchaires]

thank you thank you thank you

[rythmic122]

you're a godsend

[naomii07]

you mean...

your eyebrows are a negative externality

if your going to insult someone at least get the grammar right, yeah ?!

[lelelegend]

what is the real definition for negtive externaltives on ocr exam board

[alexorangeblues]

any negative spillover effect imposed on a third party

[klyys]

hey thanks, this helps for me as im crashingcourse :) helps alot :)

[supersupersharon]

Thank you! :D

[jahangirbek]

Good job,

Thanks

[shibamatachick]

Thank you again!!

[saradani79]

Thanks very much for the lesson.

Regards from Heidelberg.GER

[leslitatorres]

you need to explain what underlies both curves, especially the marginal benefit one

[MattyBlue]

Thank you very much literally watched this 30mins before my exam and it came up used the diagram xD - Very happy fluked another exam

[zarakshah]

u do this so good.thanks a lot.and plz keep doing this.

[allformayday]

one of our economics teachers is leaving at the end of this year, fancy coming and teaching us?

thanks for this, hopefully should help me to get an A

[g4a4ever]

thought the msc was not parallel to the mpc, very good vid

[terrymanolitsis]

doesnt have to be parallel buddy.

[g4a4ever]

thats what i said, i said i think negative externalities are internalised when both msc and mpc aint parallel learn economics dude

[pajholden]

they need not be parallel. Many texts draw them diverging at higher output levels. I draw them parallel for simplicity's sake - that's how I teach students at my college.

[Chilax]

dam why didnt i watch these i could of got an a in class

[fastfonz]

awesome.. learn more with your videos than reading a book

[yellowbluebuz]

thank you so much! this is make me understand than the explanations of my econ teacher in the college!

[Kamzui]

Darn you're good! I wish you were my Economics teacher!

[guevararushdy]

Thank you very much..great prof !