Nov 17 2009
An introduction to consumption externalities from a Singapore perceptive
Published by Andrew McCarthy at 11:25 am under Externalities,Market failure,Taxes
Externalities are a common concept, that we unknowingly encounter each day.
Externalities relate to the spillover costs or benefits that arise from the consumption or production of goods and services. To put this more simply, your friend’s consumption of products can sometimes have an effect on you. For instance his increased level of education can make him a valuable asset in quiz games, or his over-indulgence in caffeine can make him a hard person to work with in class. Sometimes society would prefer more social benefits and less of the spillover costs. The concept is called a social equilirium, where price and quantity reflect the social beliefs.
Spillover costs and benefits are things that exist in many nations. Governments for instance, work hard to discourage consumption of products with substantial spill over costs such as alcohol, cigarettes or chewing gum in Singapore. They will also aim to subsidize the production of goods, which generate positive spillover costs such as public gyms, swimming pools, running tracks or national immunization schemes.
Here are a few examples from Singapore to get you thinking about this new topic.
Negative Externality of Consumption – Cars
Living on a small island a mere 50km by 60km with 5 million people brings about many problems including traffic congestion. Whilst Singapore has an excellent system of public transport, including buses and a subway system, people still demand cars in ever increasing quantities. The spillover effects of private car use are traffic congestion and pollution. The government therefore has developed an array of policies to curb the rate of car ownership.
- When you purchase a new car you must pay, an additional 100% of the cars value to the government as an indirect tax. Imagine a new Audi, retailing for $50,000 now costing $100,000 including the tax.
- When you purchase a car you must also purchase a registration permit to drive it on the roads. These permits last for 10 years, after which you must sell the car overseas. A permit is sold through an auction system. When the demand for cars is high the price of the permit rises and demand for new cars may drop. A permit for a 2 litre engine car costs about $14,000 SGD for 10 years.
- Throughout the inner city and freeway system an electronic road-pricing scheme operates. When you drive you car under one of the gantry’s you pay a small congestion tax which is deducted from a debit card in your car. When congestion is high the early evenings the congestion tax is increased from $0.50c to $1.50 on bad days. An evening commute can result is five or six congestion charges, costing drivers anything between $6 and $12.
Negative Externality of Consumption – Chewing Gum
Chewing gum is a product, that to different people, brings either a cost or benefit to society. The consumption of chewing gum can boost the production of saliva and help reduce chance of tooth decay. On the other hand chewing gum is a sign of urban decay with pavements littered with sticky blobs and grey scars.
The Singapore government feels that society would to prefer to minimize the spillover costs of chewing gum. Instead of imposing a tax on a packet of gum, it has been banned. You can not buy gum at any supermarket in Singapore. The result is pristine pavements that allows council cleaners to focus on other tasks.
Funnily enough, the nicotine gum (used to help smokers kick the habit) is legal with a prescription from your doctor.
Discussion Questions:
- Why is chewing gum not banned in every country, if it produces spill over costs?
- What are some possible alternative government interventions to reduce traffic congestion in Singapore?
- Can you apply the concept of externalities to the consumption of deodorant? Draw a graph to show the private and social equilibriums.
About the author: Andrew is an International School educator based in Singapore, who specialises in teaching Economics and leading change in a 1:1 Apple laptop environment. He enjoys teaching the International Baccalaureate curriculum and has taught the Diploma Economics course to both Higher and Standard Level students. Previously Andrew taught in New Zealand as a Geography and Economics teacher and eLearning coach. He is an adventurous New Zealander, who enjoys running, travelling and spending time with friends and family.
Andrew is currently the head of Educational Technology at the United World College of Southeast Asia. Read more posts by this authorRelated posts:
- Negative externalities of consumption: Britain’s “inebriated hooligans”
- Internalizing externalities: Zurich’s expensive garbage
- Reducing negative externalities – the European market for carbon emissions
- Market Failure and the role of government in the economy ~ an introduction to Environmental Economics
- Student post: A look at externalities in the labor market
Jakeb and Einar
1. Because it creates jobs, helps economy, and even improves health by slowing decay for your teeth.
2. By lowering the price of public transportation even more and by adding a tax on oil so less people will fill up their car.
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1. Chewing gum is not banned in every country even when it produces spill over costs because the chewing gum industry, similar to the tobacco industry, will be severely affected. This includes unhappy shareholders and unemployment. The other reason is that chewing gum is a good source for healthy teeth, as it helps reduce chance of decay. Thus reduces the amount of money used for medical bills.
2. Some possible alternative government interventions include increasing the price of petrol, lowering the price of public transportation, providing education about the dangers of toxic gas emissions from cars, and imposing an import quota on foreign cars. A quota imposes a limit upon the quantity of a good that may be brought into a country or economy over a period of time.
3. The consumption of deodorant will mainly have positive externalities, as when it is consumed, it will provide external benefits to third parties such as the society.
-Graph illustrated in notebook-
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[...] http://welkerswikinomics.com/blog/2009/11/17/an-introduction-to-consumption-externalities-from-a-sin... [...]
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1. Chewing gum is not banned in every country, because it has some benefits as well ,as listed above, by boosting the production of saliva and reduces tooth decay. Not every country see's the spillover costs greater than the benefits.
2. The government could put taxes on petrol so that people would be less willing to pay for it or lower the prices on public transportation so that people would be more inclined to use it.
3. Deodorant can be seen as a positive externality because it benefits not only the consumer, but a third party that was not part of the market transaction. Everyone is happy
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1. Why is chewing gum not banned in every country, if it produces spill over costs?
Chewing gum has negative externalities, to be sure, and therefore, its Marginal Social Cost is definitely a problem. However, depending on the country's Marginal Social Benefit, the country might make a different choice. For example, in Singapore, the government has weighed the costs (dirty sidewalks, etc.) and the benefits (happy citizen, good breath) and has decided that in that country, they will ban gum. However, if the benefits are larger in another country (people are especially in need of gum, or are not as willing to stop), the intersection of MSB and MSC will be in a different spot, resulting in a different action by the government.
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What are some possible alternative government interventions to reduce traffic congestion in Singapore?
Some possible alternative government interventions are the government could put a tax on petrol, they could make public transportation cheaper, they could make cars more expensive and they could make more public transportation, who comes often and is fast. All of those choices would lead to a decrease in demand for cars and increase in demand for public transportation and reduce traffic.
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1. It is not banned in every country because the other governments have weighed the marginal social benefits and marginal social costs and they have found other ways to control the costs without completely losing the social benefits, such as the health benefits. Graphically, the intersection of MSB and MSC is placed at a different point than in Singapore, and at a point which still shows necessary benefits from the Chewing Gum market.
2. The government could subsidize public transportation and increase the taxes on oil. There could be improvements to the capital resources and more stops built to increase its effectiveness and make it more accessible.This would encourage public transportation and discourage private transportation, possibly lowering traffic congestion.
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Chewing gum is not banned in every country because not all governments weigh the spillover costs heavier than the social benefits arising from the consumption of chewing gum.
The government could increase taxes on petrol or expand and subsidize the MRT system in order to make more people take trains rather than use their own car.
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1) Chewing gum is not banned in every country because it creates economic opportunities and provides employment. Despite the negative spill over to society, it also has benefits of keeping your teeth healthy. Countries may have chosen healthier teeth rather than spill over cost for cleaning the chewing gum.
2) The government can subsidize the public transportation more or increase the tax on petrol.
3) Deodorant consumption leads to positive externalities as the society prefers better smell rather than odor in middle of the public.
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1.Why is chewing gum not banned in every country, if it produces spill over costs?
Chewing gum is not banned in every country as chewing gum has relatively lower weight of spill over cost that influence negative externality than other demerit goods like cigarette. Moreover, chewing gum has positive externality to society as chewing gum has benefit of cleaning your teeth, and also make teeth healthy.
2.What are some possible alternative government interventions to reduce traffic congestion in Singapore?
One way of reducing traffic congestion in Singapore (Negative Externality of Production) is to subsidize public transportation in order to decrease the price of the fee, or to increase in quantity of public transportation
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1. Why is chewing gum not banned in every country, if it produces spill over costs?
Chewing gum is not banned in every country because it brings either a cost or benefit to society. it produces spill over costs as chewing gum is good for teeth and reduces chances of tooth decay.
2. What are some possible alternative government interventions to reduce traffic congestion in Singapore?
The government may increase taxes on petrol so that less people will drive their cars and use public transports and take MRT. The government may subsidize more on public transportation/MRT.
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1. Chewing gum is not banned in every country because there are benefits to chewing gum such as job opportunities and economic gains and they can keep your teeth healthy. Even though there are bad spillover effects, some governments choose to overlook the bad effects and look at the positive ones. If chewing gum was banned everywhere, there would be no more chewing gum industry.
2. To reduce traffic congestion, the Singapore government could reduce the price of MRT's and buses and add more taxes to the buying of cars and increase the price of oil. This would discourage people from spending money on cars and would reduce the congestion.
3. The consumption of deodorant will have a positive effect of externality because using deodorant will make you smell good and other people will also benefit from this because they prefer deodorant rather than body odor.
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1.Why is chewing gum not banned in every country, if it produces spill over costs?
Chewing gum is not banned in every country because it produces a employment and have a benefit to teeth, so in some countries, the MSB from chewing gum might larger spillover MPB.
2.What are some possible alternative government interventions to reduce traffic congestion in Singapore?
Might the government can increase the ERP price in the peak hours, so that people might choice to use public transportation instead of private car. Or in the second method, government might decrease the price of public transportation to reduce traffic congestion.
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Why is chewing gum not banned in every country, if it produces spill over costs?
even the chewing gum influence to positive externality to society as reduce change change of tooth decay and other, it has more negative externality that influence society and chewing gum has relatively low weight of spill over cost.
What are some possible alternative government interventions to reduce traffic congestion in Singapore?
the government can increase the price of petrol and oil for decrease the demand. which can make people to prefer using SMRT, BUS and other transport not private cars.
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1. Why is chewing gum not banned in every country, if it produces spill over costs?
Chewing gum is not banned in every country because production of gum has also benefits on society. For instance, chewing gum decreases tooth decays. However, gum has negative effects as well. For instance, littering increases dramatically but gum is still considered to have more positive than negative effects on society
2. What are some possible alternative government interventions to reduce traffic congestion in Singapore?
Government could intervene in the traffic by increasing the petrol taxes and subsidizing the MRT system in order to reduce traffic congestion
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1. Why is chewing gum not banned in every country, if it produces spill over costs?
Because chewing gum have its positive externalities that it helps reduce chance of tooth decay, as well, it could also be a industry that help the nation's economy. Singapore is a modern and clean city, which pays much attention to its city image. However, not all the countries are like Singapore, that they don't care about the city image so much, and it maybe an important industry for them to produce chewing gum and contribute to their economy. So, it is like every country has its preference, chewing gum is not going to be banned all over the world.
2. What are some possible alternative government interventions to reduce traffic congestion in Singapore?
Singapore government may higher the petrol price, provide subsidy on public transportation, and consummate the the MRT system so that people living in suburb could take MRT as well.
3. Can you apply the concept of externalities to the consumption of deodorant? Draw a graph to show the private and social equilibriums.
Using deodorant may make your body smell better, especially after you do sports and get sweaty, you won't be smelly. It's good for your personal image. As well, in some public place like a bus or in MRT, your bad smell won't affect people around you. That would also be good for the city image.
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>>Discussion Questions:
>>Why is chewing gum not banned in every country, if it produces spill over costs?
Chewing gum is not banned because its spillover benefits may be greater than its' spillover costs. Some types of gum helps to prevent tooth decay, and strengthen and clean your teeth. Producing chewing gum could be a significant industry in some countries where if it were banned would cause a loss of jobs, loss of incomes and create instability in the economy. Some countries may just not care so much about keeping their pavements gum free – or maybe banning gum like Singapore would cause a very negative response from the population. They may feel that is an infringement of their rights because they do not care so much about the countries "image" either.
>>What are some possible alternative government interventions to reduce traffic congestion in Singapore?
In some countries, such as the Philippines (and even in Singapore I think) you have to purchase a road license and this license only allows you to drive your car on certain days of the week. There are even restrictions on the number of cars per family which encourages car-pooling and so , less traffic congestion. In Singapore, the government subsidizes public transport (MRT and buses) to reduce traffic on the road.
>>Can you apply the concept of externalities to the consumption of deodorant? Draw a graph to show the private and social equilibriums.
Deodorant keeps us hygienic, possibly helps prevent the spread of infection and illnesses. It makes you smell good and is used especially after doing sports to mask the sweaty smell. If you smell bad, you will cause discomfort to people around you. If you use deodorant, this doesn't happen – considered to be a positive externality of consumption.
on graph.
private equilibrium – MSC = MPB
social equilibrium – MSC = MSB
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Why is chewing gum not banned in every country, if it produces spill over costs?
It is not banned because it is a taxable product, which creates a lot of jobs in other countries. This compared to the spill over costs, is much more weighty. Singapore is different as it does not have gum production facilities and only receive the spill over costs from gum.
What are some possible alternative government interventions to reduce traffic congestion in Singapore?
Nothing much can really be said about the alternatives to what the government is doing right now. As it is fairly effective and it actually help the government by increasing their revenue from indirect tax. It’s giving the money to the country. There is nothing much more they can do.
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1. Why is chewing gum not banned in every country, if it produces spill over costs?
Chewing gum is not banned in every country as they feel that chew gum probably has more positive externality than negative externality. They also probably feel that the spill over benefits are better
2. What are some possible alternative government interventions to reduce traffic congestion in Singapore?
The government could encourage more use of public transport to reduce traffic congestion. The government could also make it a law to have more than 1 people in the car at certain times to reduce the traffic congestion.
3. Can you apply the concept of externalities to the consumption of deodorant?
Consumption of deodorant provides us with hygienic benefits. Deodorant helps to cover up all the bad smells and therefore is beneficial to the society as they wouldn't need to smell the bad things that a man's body might have.
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1. Why is chewing gum not banned in every country, if it produces spill over costs?
-> Because the chewing gum can create both positive and negative spillover costs. Other country might think that the positive of consuming chewing gun has more benefits than negative effects.
2. What are some possible alternative government interventions to reduce traffic congestion in Singapore?
-> Advertisement(Suggesting people take public transportation, i the sort run it won't have much use, but in the long turn, it will). Also Singapore government subsidize the public transportation such as MRT and Bus to reach the goal of reducing traffic congestion.
3. Can you apply the concept of externalities to the consumption of deodorant? Draw a graph to show the private and social equilibriums.
->The deodorant has greater positive externalities towards the society. Especially to friends around you. It reduces the possible awful smell passing through air, especially after we exercise.
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1. Why is chewing gum not banned in every country, if it produces spill over costs?
Chewing gum is not banned in every county perhasps it has relatively low weight of spill over cost to the society. Oh the other hand, chewing gum also have positive externality to society for example, it provides employment opportunities and boost the production of saliva and help reduce chance of tooth decay.
2. What are some possible alternative government interventions to reduce traffic congestion in Singapore?
The government could encourage people to take public transport instead of private cars in a bid to ease traffic congestion or subsidise MRT's and buses therefore more people are willing to take public transport.
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1. Why is chewing gum not banned in every country, if it produces spill over costs?
Chewing gums are not banned in every country because, although there are negative externalities due to consumption of chewing gum, some governments would value the positive externalities of consumption more than the negative externality. Since chewing gum improves teeth health and wear off sleepiness, it's positive externality of consumption allows some government to not ban chewing gum.
2. What are some possible alternative government interventions to reduce traffic congestion in Singapore?
The singapore government could subsidize public transport which is a substitute for private transport. Also advertising public transport would decrease the number of cars thus decreasing traffic congestion.
3. Can you apply the concept of externalities to the consumption of deodorant? Draw a graph to show the private and social equilibriums.
By using deodorant, there is more social benefit than private benefit. People around you will benefit from your consumption. Thus deodorant has positive externality of consumption. The MSB is greater than MPB
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1.Why is chewing gum not banned in every country, if it produces spill over costs?
It is not banned in every country as it has positive externalities, such as it reduces the chance of tooth decay. Some country take that as its externalities so it is not banned.
2.What are some possible alternative government interventions to reduce traffic congestion in Singapore?
Government should subsidize public transportation or they could tax petrol to reduce people deiving there own cars.
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Why is chewing gum not banned in every country, if it produces spill over costs?
Chewing gum is not banned in every country because it also has some positive externalities as some chewing gum is designed to reduce tooth decay and bad breath therefore it is banned of some countries as it has negative externalities but in others it has positive externalities.
What are some possible alternative government interventions to reduce traffic congestion in Singapore?
A possible government intervention that could be introduced in Singapore is to increase the tax on cars to discourage people buying a car not only will this help reduce traffic congestion it will also help the taxi driver industry as there will be more QD for taxis. Furthermore the government could increase new schemes to increase the usage of public transport such as MRTS.
Can you apply the concept of externalities to the consumption of deodorant? Draw a graph to show the private and social equilibriums.
When deodorant is consumed is has greater MSB than MPB as it benefits the individual more than it affects the population.
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• Why is chewing gum not banned in every country if it produces spill-over costs?
Singapore, being a relatively small country, the government has greater control over the imposed ban of gum and other forms of legislation and restriction. Living in Singapore, despite the ban, I can still find gum sold in nearby stores. Furthermore, the gum industry comprises a great number of firms in producing countries. The ban or the restriction of the production of gum in other countries that do produce the product will suffer high unemployment rates that the government will then be obliged to cope with and find a solution for so as to keep its economy afloat and going. Other than this, the government could also benefit from imposing a tax on gum, which, due to the gum’s inelasticity, will be passed on to the consumers, all while maintaining the general level of production. Singapore, being such a small country with limited land, decided that it could not afford to establish gum firms in the country, and therefore banned the product all together realizing that this would benefit the society as a whole, and that there were more advantages to doing so. Other, larger countries, in which the gum industry had a chance to flourish, benefit more from the production and consumption of gum than they are affected by the negative externalities that the production and consumption of gum may have on society.
• What are some possible government interventions to reduce traffic congestion in Singapore?
Besides the radical intervention already imposed by the government on cars to reduce traffic congestion, the Singaporean government can also impose a quota on the number of cars sold per year for every car-selling firm. This will gradually reduce the number of cars on the road since every 10 years; a driver is required to renew their driving permit at a hefty price or will otherwise be obliged to sell their car overseas. In addition, the government might want to consider extending the availability of public transport besides the MRT, such as a faster and more accessible bus route system. By reducing the cost of all forms of public transport, the government encourages its ‘consumption’ as an alternative for riding a private car, thus reducing congestion. For more extreme measures that would also greatly reduce the pollution and greenhouse gases emitted by the cars driven, the government can also impose a law which obliges drivers to purchase solely ‘green cars’ certified by the government. A new routine can also be used where only cars whose licence plate number ends with an odd digit can drive on ‘odd days’, and similarly, those ending with an even digit, on ‘even days’. This will most likely reduce the number of cars on the roads by half. An additional permit/sticker can be purchased for those who would like to drive their cars everyday; increasing the price of owning, using and maintaining a car, thus decreasing the demand for cars in general. Finally, a last alternative the government can turn to is advertisement both for its MRT system, public transport, and also negative advertisement concerning the detrimental effects triggered by the greenhouse gases emitted from cars.
• Can you apply the concept of externalities to the consumption of deodorant? Draw a graph to show the private and social equilibriums.
Deodorant is nowadays considered to be a necessity for the maintenance of physical hygiene, which then explains the positive externalities of consumption that it generates to society as a whole (encourages group work and eliminates foul non-hygienic odours and public discomfort from colleagues or strangers).
The following graph illustrates this phenomenon.
(Graph cannot appear)
Figure 1: Positive Externalities triggered by the Consumption of Deodorant
As illustrated in figure 1, the private marginal benefit curve shifts to the right to form the social marginal benefit curve indicating the presence of a positive externality of consumption of deodorant and also a welfare gain shown by the pink shaded area. Therefore, there’s an under consumption of deodorant of QQ1 in society disabling it from reaching its socially optimum quantity of consumption/production: Q1. This under-consumption is explained by the fact that when ‘consuming’ deodorant, an individual only considers the private benefits rather than the social benefits to society as a whole.
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Comment on Mhairi Hutchison’s response:
Although I agree with the approach that the government should further subsidize public transport to encourage its use as an alternative for cars, I would have to disagree with the approach of imposing a tax on petrol to reduce congestions. Imposing such a tax will not be very effective since the demand for petrol, a main source of energy used worldwide with several applications, is quite inelastic, implying that although the prices for petrol may rise significantly for consumers with this tax, there will most likely be a less than proportionate decrease in demand. Only the government will benefit from this tax as a source of revenue, but the problem of traffic congestion will still not be resolved. In addition, the cost of production for goods which may generate positive externalities will rise with the tax on petrol, thus decreasing their production to a less than optimum level, causing welfare loss.
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1)Why is chewing gum not banned in every country, if it produces spill over costs?
Chewing gum is not banned in every country because its spillover benefits may be greater than its’ spillover costs. Besides minor health benefits the production of chewing gum might be a valuable source of income and employment to the country. The banning of chewing gum could cause unemployment and loss of income along with economic instability.
2)What are some possible alternative government interventions to reduce traffic congestion in Singapore?
To reduce traffice congestion in a city the size of Singapore signifigant tax's should be put in place on car's being allowed to enter the city limits. Also an effort to increase public transportation usage would encourage people to step out of their cars and into a city bus. Within the realm of public transportation new metro systems, bus lines etc. could be built to connect more parts of the city thus reducing the need for driving.
3)Can you apply the concept of externalities to the consumption of deodorant? Draw a graph to show the private and social equilibriums.
When deoderant is consumed it has more MPB then MSB because it affects the person more than it affects society, like say a car and it's fumes would be.
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Comment to Yu Sheng:
Your suggestion to make law that there must be 1 or more people in the car at certain times is radical and would be very effective. But Singapore is a large city and this create other problems such as over worked public transportation and unneccesary fines and jail time.
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1. Why is chewing gum not banned in every country, if it produces spill over costs?
Each government has to decide to which extent they will respond to banning products that produce spill over costs. Some governments may choose to stay away from this issue and prefer to not interfere with markets but may try to modify the behavior in firms and individuals. In some countries spill over costs could be dealt with more or less serious form of government provision to the point of removing or nationalizing an industry.
2. What are some possible alternative government interventions to reduce traffic congestion in Singapore?
Some alternative government interventions to reduce traffic congestion in Singapore could be:
• to continue improving the efficiency of public transport in every area of Singapore
• to re-educate the population of Singapore starting in schools. Children and adults must be made aware of the health risks and the risk for the environment.
• the government could impose an additional environmental tax all through direct control decide that each family can own no more than a fixed number of cars
3. Can you apply the concept of externalities to the consumption of deodorant? Draw a graph to show the private and social equilibriums.
In most societies deodorant is a basic necessity, providing personal hygiene and therefore increase self confidence but also guarantee a more healthy working environment.
There are positive consumption of externalities of deodorant, so MSB is to the right of MPB. The vertical distance between those two curves at each output level is the value of the external benefits.
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Commenet on Chouvalit's response:
Aside from taxation, wouldn't you also agree that the government could create advertising campaigns that inform consumers of the negative effects of congestion and use it to promote public transport? I think that simple taxation would not solve the problem since consumers still need a way of getting around. If an alternative (public transport) is advertised and demand for it is increased significantly, then consumers are more likely to use this form of transport thus reducing congestion.
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1. Why is chewing gum not banned in every country, if it produces spill over costs?
Chew gums are not banned everywhere because they may have different effects on people, depending on the culture they come from and the respect that the citizens have for their county. So, in some countries could happen that social benefit for the consumption of chew gums is greater than the negative spillover; consequently the government would be enthusiastic to promote something positive for society.
2. What are some possible alternative government interventions to reduce traffic congestion in Singapore?
There are many other possible ways that the government could attempt to use to reduce the traffic congestions in Singapore. Some could be: improve the quality and the efficiency of public transports so that people are more likely to use them instead of taking their own cars; make laws that the car in order to run has to be full in terms of people inside it or just order a minimum number of people possible in a car; encourage the idea of using bicycles and rollers by making advertising; establish days in which only the street signs that end with a positive number can circulate and others in which only the ones that end with a negative number can go around.
3. Can you apply the concept of externalities to the consumption of deodorant? Draw a graph to show the private and social equilibriums.
Yes, we can apply the same concept of externalities to the consumption of deodorants since they can have both a positive and negative impact over the people who take use of them. This is due to the fact that in some countries people could benefit from using deodorant because it avoids smell and this is good for society. On the other hand, other deodorants could cause some serious health problems as strong irritation or other more important maladies in the armpits because people may be not used to them, therefore they would need more cures and the government would have to raise the quantity of money for health care and there could also be an inefficiency in work because if more and more people have these problems they may stop working until their health improve. In this case the social benefit would be surely inferior to the private benefit therefore causing negative externality.
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Why is chewing gum not banned in every country, if it produces spill over costs?
- This is because the negative externalities of chewing gum outweighs its benefits especially in Singapore. The severely limited area and the almost entirely urban environment renders the country's street aesthetics extremely vulnerable to the 'grey scars' which the gums leave on the roads. Simply put, it wouldn't take too long for a population of 5 million to cover up its streets with remains of chewing gum when the entire island is only about 50 km long. On the other hand, most other countries do not have to deal with such an issue (at least not to the same extent) because of their larger area.
What are some possible alternative government interventions to reduce traffic congestion in Singapore?
- the government could also set systems in which people will have to take turns in driving. For example, South Korea implemented a system in which cars have to take turns in driving according to their number plates. (e.g. Monday is for odd plates etc.)
Can you apply the concept of externalities to the consumption of deodorant? Draw a graph to show the private and social equilibriums.
- the consumption of deodorant has positive externalities. Deodorant removes the foul stench from people and encourages interactive endeavours and also boosts self-confidence in those who use it. Thus the MPB graph is on the left of the MSB graph and the vertical distance between the two lines represent the positive externalities.
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Comment on Eleonora_Bisio's response:
1. Could you give some examples to elaborate on your response?
3. You made it sound like there are in fact more disadvantages to using a deodorant than there are advantages. But I disagree with this point. First of all, if one has sensitive skin, one is to find out pretty early in his life regarding his skin condition and one will be quite careful in what kind of products they use and will most likely find alternative ways to prevent stench. On the other hand, the pleasant effects of deodorant usage will certainly bring benefits in interpersonal interactions.
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Javier_Alberite_Carreno
Why is chewing gum not banned in every country if it produces spillover costs?
What are some possible government interventions to reduce traffic congestion in Singapore?
Can you apply the concept of externalities to the consumption of deodorant? Draw a graph to show the private and social equilibriums.
Chewing gum is allowed in some countries due to both the culture of that country and the government’s position about that; maybe a country doesn’t consider that allowing chewing gum has more spillover effects than social benefits, so they allow it. And there are some countries where, due to cultural matters, they may respect more the pavement, not throwing gums anywhere, what reduces spillover effects.
The interventions that they have made, taxation, is good enough in my opinion, if the traffic congestion is still high, they could limitate the number of cars per family to one, or overtax the sell of cars that tend to congest more the traffic, for example Audis and BMWs.
As deodorant reduces the sweat odor of people, it’s considered a positive consumption externality by society, which produces a generalized good for our community, that’s why the government, in order to increase demand, could apply a direct subsidy to the acquisition of deodorant, especially on summer time.
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Comment on Won_Woo_Choi’s response:
I did not know the system used in South Korea but it is very useful, because Korea has higher traffic congestions rates than Singapour. But, what are exactly the fines set on the people that doesn't obey the policy?
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-Why is chewing gum not banned in every country, if it produces spill over costs?
Chewing gum may have spillover costs; however, these costs are very minute compared to others, and gum has positive externalities, which make up for the negative. In my opinion, Singapore went to far with their ban of gum. Some people cannot focus if they are not chewing gum. If the US banned gum, the production rate for all businesses would drop. Some people must always be chewing something. If gum were taken away, they may resort to junk food, thus increasing the obesity rate as well. Gum is also commonly used on airplanes to prevent pressure from building up in your ears. This will make airplane trips far less productive for traveling business people who are distracted by the annoying pressure in their ears. Like the article said, gum also helps prevent tooth decay, and can strengthen your jaw. New technology is even coming out that involves whitening solution in gum to whiten teeth. All of these effects may seem small; however, together they add up, creating a much more inefficient United States, or any other country if a ban is created. Is it worth that fall in production just to have prettier sidewalks?
-What are some possible alternative government interventions to reduce traffic congestion in Singapore?
The article stated that Singapore had very good public transportation; however, it did not state how much it cost. If the government made the public transportation very affordable, it would convince people to use it even more. In my opinion, with the tax already placed on cars, you would be foolish not to use public transportation.
-Can you apply the concept of externalities to the consumption of deodorant? Draw a graph to show the private and social equilibriums.
There will be positive externalities for the consumption of deodorant and negative externalities for its production. If people use deodorant, it prevents them from smelling bad, thus creating a better working environment for others around them, improving production. The factories that produce deodorant emit harmful chemicals into the air that damage the ozone and increase global warming.
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Comment on Won_Woo_Choi's response:
1. For example, in certain countries, as Switzerland or Austria, people may be more respectuful or just pay more attention to the environment not throwing the chew gums in the street, so in this case chew gums would have a positive impact on society because they would reduce tooth decay and the social cost would be greater then the private cost. While in other countries people may just be be unrespectuful for the environment trowing the chew gums in the street and in this case the social benefit may be less then the private benefit causing negative imact on society.
2. Well, of course, in the majority of cases deodorants will benefit society, however, they may still have contraindications because not always irritations come in early ages, but is the continuous use of deodorants that may cause it. Moreover, in some poor countries people may not know deodorants and their genetic make up may not be used to deodorants rejecting them causing searious health problems.
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Why is chewing gum not banned in every country if it produces spillover costs?
Chewing gum is useful as it helps keep teeth clean and prevents from bacteria and tooth decay. Gum is a very big business because it is in high demand especially for teenagers,smokers who want to quit and for dental purposes so if it is banned in a lot of countries many people will not have a job and this business requires a lot of people. Places like in Singapore the government is really certain about keeping the surroundings clean because people tend to stick it everywhere. Not many countries care about the surroundings like Singapore does.
What are some possible government interventions to reduce traffic congestion in Singapore?
What are some possible government interventions to reduce traffic congestion in Singapore?
Some possible government interventions to reduce traffic congestion in Singapore are:
• The government could promote public transport more and they could give reasons why it is better. Public transport is good for nature, it also involves exercise as you need to walk to the bus stop or MRT station and it is cheaper than owning a car and filling in all the details of tax fees
• In one family only a certain amount of cars can be owned, so this encourages parents to drive their child to school or make the parents leave for work together.
Can you apply the concept of externalities to the consumption of deodorant? Draw a graph to show the private and social equilibriums.
In my opinion we can apply the concept of externalities to the consumption of deodorant because deodorants are a necessity nowadays as everyone uses it on normal everyday basis. It is necessary for good hygienic health, but some people are against deodorant as it is not good for the skin and can cause health problems
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1. Why is chewing gum not banned in every country, if it produces spill over costs?
Simply it is because those other countries do not find the reason they should ban chewing gum. As it is explained in the article above, gums brings spill over costs to the society but many government may consider that it is a small amount of money and it has some positive externalities. The positive externalities are bigger than spill over cost. But in case of Singapore, it is crucial to ban gum for cleanness reason. Since it is a tourist country which means that the reputation is very important. Therefore, it needs to be clean to attract more tourists. For example, I currently live in Singapore and I can see that Singapore government put extra effort on keep the city clean. Another example of this is spitting is banned in Singapore too. If someone spits on the road and get caught then the one will have to pay very expensive fine.
2. What are some possible alternative government interventions to reduce traffic congestion in Singapore?
There are several government interventions in order to reduce traffic congestion in Singapore. The most hated way and the most efficient way is ERP. In other words electronic road-pricing scheme operates. Every drivers have to pay 1dollar 50cents when they pass under the ERP (electronic road-pricing) and there are quite a number of ERPs in Singapore. This extra charge discourages Singaporeans to drive during rush hours. Moreover, Singaporean government encourages people to use public transportation. In the actual move, now there is a new MRT line construction going on and government planned to buy more buses by the end of this year.
3. Can you apply the concept of externalities to the consumption of deodorant? Draw a graph to show the private and social equilibriums
Nowadays deodorant became one of the basic necessities of some people for hygiene or other reasons. Deodorant can reduce the problems with terrible odour and give extreme displeasure to others. This will bring the confident to the people who use deodorant. Therefore, the consumption of deodorant has positive externalities so the MPB graph is on the left of the MSB graph and the vertical distance between the two lines represent the positive externalities.
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Comment on sundos' response
in the question number one you said that , "I can still find gum sold in nearby stores. Furthermore, the gum industry comprises a great number of firms in producing ". Do you really see gum in stores? It is illegal in Singapore to sell gum in normal stores without doctor's prescription. You can only buy gum from pharmacy with doctor's prescription for medical useage. Actually people bring gum from abroad (it is illegal to bring gum from abroad but some people do it) and chew gum on the street and even in front of the police. It is possible because chewing gum itself is not an illegal action in Singapore. Spitting the gum out on the road is banned and seriously punished because spitting on the road causes the spillover cost.
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Response to Mitchell_Broughton:
I agree with you that if they ban chewing gum, junk food will be the next thing in line. In Singapore public transport fees are very cheap it is only when you take a cab/car when the ERP is charged.
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1.Why is chewing gum not banned in every country, if it produces spill over costs?
I would say that the main reason is that the amount of people buying it surely creates a good amount of tax revenue for the government which can be used to pay for cleaning services and other government purposes. Also it creates business opportunities in a country, for example if the Trident brand noticed a rise in gum consumption in Portugal, they might be interested in opening a factory in Portugal, as it reduces transport costs from wherever the other factory was, they could keep the price the same, and increase revenue without anyone really noticing.
2.What are some possible alternative government interventions to reduce traffic congestion in Singapore?
They could ban families from owning more than one car, or they could create laws that would indirectly force people to use public transport instead, such as closing off roads that lead to the cities main commerce area, however still keeping the bus route and subway open, to that area.
3.Can you apply the concept of externalities to the consumption of deodorant? Draw a graph to show the private and social equilibriums.
If an individual uses deodorant, they smell good and feel clean, thus resulting in a private benefit: in this case society would also benefit as people are clean and smelling nice, pleasant for everyone. This results in MPB being equal to MSB. Costwise society would be affected more and in a worse manner, this because the individual purchases the deodorant and thats it, society would then have to deal with the negative effects on the environment that the deodorant has, such as ozone destruction and the emmission of CO2 due to transport; this results in a higher MSC than MPC which creates a negative externality.
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Response to Javier Alberite
I agree with your first two answers, however do you honestly think that there are no negative externalities with the deodorant; what about the environment a lot of deodorants, especially cheaply manufactured ones, have very bad effects on the environment, such as ozone at ground level or the destruction of it in the ozone layer.
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Comment on Eleonora
I like your externalities for deodorant. I did not take into account the irritation deodorant can cause. You also make a point in your comment that everybody is different. This helps us as analysts to realize that we should not analyze things from just our point of view, but to take into account others. This makes me reconsider a point I made in my comment. I stated that chewing gum could help focus people, but I did not take into account that people chewing gum around a person could distract that person. Just because it would not distract me does not mean it cannot impact society.
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1. Why is chewing gum not banned in every country if it produces spillover costs?
Chewing gum is very widely loved and used, and the banning of it would be ill-received. There are many products that, if banned, would ameliorate the quality of lifestyle for the general public. However, they cannot all be banned, because the government would be controlling personal choice.
What are some possible government interventions to reduce traffic congestion in Singapore?
Governments could implement more efficient traffic control methods, like roundabouts, that efficiently deal with traffic at intersections. They could also outright limit the amount of cars on the street at one time.
Can you apply the concept of externalities to the consumption of deodorant? Draw a graph to show the private and social equilibriums.
When somebody uses deodorant, the person as well as the people around him or her smell the pleasant scent and therefore the society benefits. This is shown as MPB, equal to the MSB. However, the society suffers a cost because the production of the deodorant causes pollution, and therefore the MSC is higher than the MPC, creating a negative externality.
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Comment on Javier's Post
I do not think that the government needs to implement a subsidy on the deodorant, because people who buy deodorant buy it regardless of the price, and the positive externality is just a side benefit.. There is no need to try to increase the demand by lowering the price.
-Michael
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Response to Federico
Those ideas on how to decrease congestion in Singapore are very creative, and I imagine that, if implemented, would function as intended. I particularly like how you are thinking of more indirect ways of dealing with the problem, in other words instead of suggesting a law that would limit the amount of cars on the road, you talk about urging people to actually choose to get rid of their cars by making cars inconvenient. That is very smart.
-Michael
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Why is chewing gum not banned in every country, if it produces spill over costs?
As the article points out, Singapore is a very small island thus making it easier for the government to control. In other countries such as the United States, the government cannot control a product like gum since it is not harmful to people like tobacco or alcohol. If the government began to ban gum, there would be a huge uproar by the media and people saying that the government is moving towards a dictatorship. With few substitutes and since gum is so popular with people they would not be happy to lose it. If the government found a reason to believe gum is harmful to people’s health they may have a case but for now people would not accept the banning of a product that is not harmful to the health of the user or others claiming it goes against the free market economy.
What are some possible alternative government interventions to reduce traffic congestion in Singapore?
The government could raise prices on gas significantly. This is similar to the tolls on the roads since people buy their car and then have to continuously pay high fees to get to their destination especially since cars need gas currently so higher prices will discourage people from paying those high prices on a daily basis. Singapore could also set up more options for public transport that are cheaper. There could be buses, trains, subway systems, etc. Singapore could also restrict people to using cars for longer distance travels. If people are only going a couple miles then they have to use public transport and only in the case that they are traveling very far where they would lose a lot of time by stopping continuously at bus stops can they use private transportation options.
Can you apply the concept of externalities to the consumption of deodorant? Draw a graph to show the private and social equilibriums.
Deodorant has positive consumption externalities since it helps give a person a better smell, which can make for a better appearance at social events and people will not mind standing close to you. This graph shows how the Marginal Private Benefit (MPB) intersects the Marginal Cost (MC) at a price of P1 and a quantity of Q1. Since deodorant has positive consumption externalities the Marginal Social Benefit Shifts right and has a new point of intersection – or optimum equilibrium point of price P2 and quantity
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Response to Mitchell Broughton
It is interesting the points you bring up. Gum is more than just something people like, it is possibly reducing obesity from people eating instead of chewing gum, it is cleaning our teeth and doing many more things. It seems like it saves us more on other things than it takes to clean the streets, producing possible benefits to society since less people need health care. Very thoughtful response.
Noah
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Why is chewing gum not banned in every country if it produces spillover costs?
Chewing gum is not banned in every single because besides the fact that it is often littered everywhere, the public does not perceive that it is a real threat to their health. If it were banned, conclusions would be drawn as to why it was banned that are not necessarily true. There would be a protest of the ban pending on the reasons for the ban.
What are some possible government interventions to reduce traffic congestion in Singapore?
The government could issue tax bonuses for families who carpool their children to school or use bikes more often than they use their car. Limiting the usage of a car, although hard to regulate, would also help. On a less intrusive, broader scale; the government could redesign the traffic flow throughout the country.
Can you apply the concept of externalities to the consumption of deodorant? Draw a graph to show the private and social equilibriums.
Deodorant is a positive externality because although an individual cannot control whether their peers use it or not, when the peers do, it improves the daily life of that individual and of other around him/her. The graph in the dropbox illustrates the way that the MPB has a direct effect on the Marginal Cost
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Reply to Noah Flaniken
The government does however have a right to ban what they wish with just cause. I'm not sure if the banning of gum would immediately define a country as a dictatorship but I suppose that the dictating must begin somewhere; gum or somewhere else.
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1) The main reason for me for chewing gum not being banned in most countries is that it is widely used by the people and it is an inelastic good. People like chewing gums and they always buy them. So, government can benefit from it by imposing taxes on chewing gums. Also, people wouldn't have a "nice" reaction, if chewing gum was banned. It would lead to many protests and demonstrations. Which is not happening in Singapore, because it is very small country and it is easier to control. Another reason might be that chewing gum doesn't only have negative effects. It also has some good ones, like making breathing fresh.
2) Government could impose such taxes that would make owning a car much more expensive than it is in that area. They can also ban importing foreign cars, but it would have some serious consequences. Improving public transportation system is the key to reducing the number of vehicles. The best way is to make subway better and cheaper (maybe free for students and pensioners). There wouldn't be any traffic problems if they would do that.
3) Using deodorants has positive externality as it gives to people better smell and it also keeps them from smelling bad. However it has some disadvantage too, as it contains some chemicals that are bad for nature. On the graph, MPB would be on the left and MSB on the right. The distance between them shows positive externalities.
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Why is chewing gum not banned in every country, if it produces spill over costs?
What are some possible alternative government interventions to reduce traffic congestion in Singapore?
Can you apply the concept of externalities to the consumption of deodorant? Draw a graph to show the private and social equilibriums.
1) Well because at least consuming chewing gum still has its benefits and advantages. Such as reducing the habit of smocking, or to increase saliva.
2) Some other possible alternative will be car-pooling. Car pooling can be a good choice especially for students who are going to the same school and living just within the area. Same thing goes to the adult workers.
3)Deodorant will resulted in positive externalities as it reduces the bad smell that is inside our body. However, as it is made up from some chemicals like how hair-spray's ingredient is, that will be the negative externality. The graph will be showing MPB would be on the left and MSB on the right.
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@# Noah Flaniken
Good explanation and i agree on that. Singapore is smaller and easier to control. compared to other countries.
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Why is chewing gum not banned in every country, if it produces spill over costs?
It is not banned in every country because: First of all, the view of the Singapore government is not the same as every government, it is very difficult to pass laws like that, and also very difficult to convince the senators that chewing gum is as bad as it sounds. Also, the spillover costs may not be as bad as the good things, the chewing gum industry is a large industry and banning a big corporation is a very dangerous thing to do.
What are some possible alternative government interventions to reduce traffic congestion in Singapore?
They could limit the amount of cars available and sell them on auctions, so that there would not be enough cars to cause traffic jams. I dont know what else could help, except more taxes, which is not a good alternative.
Can you apply the concept of externalities to the consumption of deodorant?
Yes, you can do it with almost anything. Some spray deodorants can destroy the ozone layer and other parts of nature, as well as insects and may cause allergy to some people. It would have positive externalities because it would destroy negative odors in the cities.(I dont know how to attach a graph to this comment)
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Hello Merab
Great answer for number two. I really did not think about improving public transportation, great idea. But I don't believe that more taxes would work, they already have enough.
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1. Why is chewing gum not banned in every country, if it produces spill over costs?
Chewing gum is not banned in every country because some countries consider that the social benefits are greater than the social cost of decaying the roads. It is up to the criteria of the country but most countries do prefer the advantages over the costs.
2. What are some possible alternative government interventions to reduce traffic congestion in Singapore?
The government could apply incentive people by evading the quotas on people who carpool. Government could also put taxes on necessary car products such as repair shops or repair items.
3. Can you apply the concept of externalities to the consumption of deodorant? Draw a graph to show the private and social equilibriums.
Deodorant would produce a negative consumption exernality because it freshens the person but it breaks the ozone layer.
The marginal social cost would shift to the left while the marginal private cost will stay the same.
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@ Francisco_Jose_Carillo_Fernandez
Cus, very good points. I agree with you completely. Your examples are very thorough and well explained.
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1) Chewing gums are not banned in every country even if has spillover cost. Because the social equilibrium is achieved. In terms of the economy and health, chewing gum can be supported. Many people can earn money from that sector. Moreover it can boost the production of salivia and help reduce chance of tooth decay
2) They can make low the price of the transporting cars. also they can put a tax on the oil which makes hard to use individual cars. By these caution government can make citizens use transporting cars.
3) The consumption of deodorant can be seen as positive externalities. Because when people use they can have the benefit thay want also people will deal with a person who smell nice. Therefore it creates a circle in which everyone is happy.
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@ tiffany
I agrre with your third answer. you are totally right about the bad effect of the deodorants even if it creates a positive externalities in terms of economy. In long term it can turn negative one as you said.
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1.Why is chewing gum not banned in every country, if it produces spill over costs?
Chewing gum is not banned in every country because it has social benefits even though it has some social cost. The social benefits are larger than the social cost. For example, chewing gun has some benefits for human health and there are a lot of people gaining money from that sector.
2.What are some possible alternative government interventions to reduce traffic congestion in Singapore? There can be some taxation occuring on oil and cars. Also , the government can lower the price for transporting cars.
3.Can you apply the concept of externalities to the consumption of deodorant? Draw a graph to show the private and social equilibriums
Using deodorants can be seen as negative externality, because it is dangerous for environment.
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@Merve akpinar
I dont agree with you on your third question, but I understood your point of view.
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1. Chewing gum is not banned in every country because it is a successful market. The spill over costs generated by chewing gum are not so great, and are compensated by the fact that the sale of chewing gum offers people jobs and its consumption helps prevents tooth decay. The majority of countries have given more value to the positive externalities brought upon by chewing gum, over the negative ones.
2. Besides charging extremely high prices to use cars, the government could also subsidize public transportation to make it better and more efficient. If public transportation becomes a good alternative for cars and is cheap, people will be more likely to use it rather than a car, and so help reduce traffic congestion.
3.Deodorants provide consumers protection from bad odor and sweat. Deodorants generate the positive externality of also making a third party happier because others around them don’t smell so bad. This means that the MSB curve is above the MPB.
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@ Ozge_Elif_Ozer
In your answer to the 3rd question you said that deodorants generate negative externalities. Although you are correct if you are thinking about aerosol deodorants, which contain harmful fumes for the environment, regular deodorantes are not so harmful and actually offer positive externalities by making people smell better.
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1. Banning chewing gums would be the end of the chewing gum industry. The workers in the industry would be unemployed. Irreversible capital would be one of the drawback of the ban. Besides, chewing gums has benefits such as preventing tooth decay.
2. Electronic road pricing system would be helpful to reduce the traffic congestion. Additional taxes on oil may be applied. Enhancing the public transportation would reduce the traffic congestion, as well. A quota for cars sold per year may be applied.
3. The consumption of deodorants have positive externalities of consumption. The third party benefits deodorants, as well. Marginal social benefit is greater than marginal private benefit.
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@Frederico Carvalho I agree that closing some roads to the cars would really reduce the traffic congestion. This would force many car owners to use public transportation.
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1. First of all, the main reason chewing gum is banned in Singapore is because people stuck their gum onto train sensors (MRT Train service), which caused problems for train doors to function properly. Not only was it dangerous for the people but also the repair cost was also pretty high. Therefore gum had negative spill over costs (negative externalities) and then lead to the ban of it. If gum were banned in every country, the firms operating in that specific service/production would lose a lot of money. For many countries, the positive externalities could be greater than the negative externalities (as some mint gums usually have xylitol which is good for our teeth).
2. I believe that Singapore has taken many actions to reduce the number of cars(?) or in my point of view they have done this to make more money. Living in Singapore, I think the only way for the government to reduce traffic congestion is to reduce the prices of public transportation instead of increasing (which is what they do over a period of time). Or another possible alternative government intervention could be imposing a higher tax on oil/petrol so the demand for oil would decrease (however Singapore has a LOT of ERPs, yet the traffic congestion seems to be worse, and also the fact that Singapore rains a lot).
3. As much as a lot of people think the consumption of deodorant is a positive externality (as it benefits society in the way that it makes you smell ‘better’), the first thing that came to my mind was the deodorant having a negative externality. This is simply because the use of deodorants (specifically canned deodorants) harm the environment, I believe the use of canned deodorants break the ozone layer.
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To: Noah Flanikenon
Although the chewing of gum does not cause a big problem such as the consumption of tobacco products (causes cancer and such), the excessive chewing of gum could cause Temporomandibaur joint disorder (TMJ), which I think it causes pain to your jaws, and could only be fixed by dentists and such. Therefore it is somewhat harmful to our health.
I also agree with the fact that you think the government could raise prices on gas. However I disagree with your point on taking public transport for long distance travels. Singapore is a small island (as you also said in the beginning), therefore technically all travels made would be short distance in which that would mean the complete ban of cars. And I also think that it is a good thing that buses are stopping continuously, as it means that more people are riding on the same bus.
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Why is chewing gum not banned in every country, if it produces spillover costs?
-Chewing gum is not banned in every country because it has some benefits for society. For example chewing makes teeth healtier.
What are some possible government interventions to reduce traffic congestion in Singapore?
-I think the government should increase the petrol price. So people can use public transportation and traffic congestion can be reduced.
Can you apply the concept of externalities to the consumption of deodorant? Draw a graph to show the private and social equilibriums.
-I think using deodorants can be seen as negative externality because it has a lot of disadvantages for the environment.
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@tomoya_sekine
I liked your opinions for the 2nd question. Giving examples made the work easier to understand.
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• Why is chewing gum not banned in every country, if it produces spillover costs?
It is not banned because, the spillover costs vary from place to place and the spillover costs also can be avoided through other methods such as education, banning the product is not necessary.
• What are some possible government interventions to reduce traffic congestion in Singapore?
To reduce traffic, then the government can regulate the amount of cars in the city per day with plate restrictions such as saying all plates in range (x, y) may not go in the city from 6 in the morning to seven in the afternoon. Or tax the cars, witch will directly reduce their demand.
• Can you apply the concept of externalities to the consumption of deodorant? Draw a graph to show the private and social equilibriums.
Pollution because private cost is small than the social cost.
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@ Nicole Sonderreger.
Today, thanks to technology, most deodorants even in aerosol are cfc free and thus pollute a lot less. which is something to take into account when talking about externalities.
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Why is chewing gum not banned in every country, if it produces spill over costs?
Chewing gum is not banned in every country because they do not think that the impact of spill over cost is to important. As well the business of gum move a lot of money in the markets so if the gum is banded many sectors will loose money.
What are some possible alternative government interventions to reduce traffic congestion in Singapore?
Alternative to the government interventions to reduce traffic congestion in Singapore could be to reduce the taxes to public transportation so the cost of this kind of transportation is reduce so more people us it. Another alternative is to restrict car one day each week depending on their number of license.
Can you apply the concept of externalities to the consumption of deodorant? Draw a graph to show the private and social equilibriums.
The consumption of deodorant in most countries is positive because they make the consumer sell good so those surrounding him which did not participate in the transaction receive a good smell from the consumer.
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Hi, Fabian I agree with you that deodorants have negative externalities as pollution. CFC are a important contributer to global warming.
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• Why is chewing gum not banned in every country, if it produces spillover costs?
This is because chewing gum can bring either positive or negative externalities by consuming by different people. Despite the small relatively small positive externalities, another reason for chewing gum being not banned in every country is that it is an industry which boosts economy and brings jobs to people. Some countries may weigh the importance of chewing gum greater than the negative externalities it brings. Or they feel they can control the social costs without completely losing the social benefits.
• What are some possible government interventions to reduce traffic congestion in Singapore?
1. To allow more SMRT (public buses) that go the popular routes running on the road during high congestion period.
2. To make taxis surcharge people who take taxis during busy hours.
• Can you apply the concept of externalities to the consumption of deodorant? Draw a graph to show the private and social equilibriums.
The behavior of one person using deodorant can prevent people around him/her from suffering a stinking atmosphere. This indicates a excess social benefit of private benefit, resulting in a positive externality. As shown in the graph below, the private equilibrium is at the output level of Q1 and the social equilibrium is at the output level of Qse. We can see a under-consumption of deodorant by simply applying the concept of externalities.
However, in my personal point of view, I don’t think people should consume more deodorant. This is because I don’t think deodorant could do any good to people’s health but making them rely on the product. Besides, the extra social benefit seems to be too small to be taken into account (can people work more efficiently simply because they smell something good?).
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@tomoya_sekine
I do agree with your idea about that the use of deodorants harm the environment. Sometimes a good can have both positive and negative externalities, another example we saw eariler was the consumption of chewing gum.
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1. Chewing gum is not banned in every country because it does not only produce spill over costs, but, as this article mentions, it also helps prevent tooth decay. Not only this, but if chewing gum is banned in every country there would be a lot of unemployment and unhappy people. Selling chewing gum helps the economy of the country in a certain way. Also, it might be that in some countries the pavements are “littered with sticky blobs and grey scars” but in some other countries the garbage that people throw to the streets is more controlled. Either they need to pay if someone catches them throwing garbage to the streets or there are people that are cleaning the pavements constantly. This makes the benefits that chewing gum brings greater than the spillover costs.
2. Some possible alternative government interventions to reduce traffic congestion in Singapore are that they could impose more taxes on oil so that less people can afford it and only people that have a lot of money can afford having their own cars. The government could also increase even more the price of the permit to drive and they could lower the prices of the public transportation, such as buses and cabs.
3. The concept of externalities could be applied to the consumption of deodorant because there are some deodorants that are not good for the ozone layer, like the ones that contain CFC’s. So deodorants bring benefits because it helps people to smell good but it brings negative consequences to the ozone layer. People should buy deodorants that say that they do not contain CFC’s. My graph couldn’t be attached but what happens would be that the marginal private cost stays where it is but the marginal social cost shifts leftward.
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@ Fabian_MontoyaFendt
You answered all the questions ver well. It is true that banning chewing gum is not really needed is there is education in the country. And the plate restrictions are also a great idea to reduce traffic congestion in Singapore since there would be less cars driving at that time every day.
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1. Many people prefer the social benefits, such as preventing tooth decay. Also, spillover costs are not the only concern. Sometimes, human rights take precedence.
2. Improving the public transport system to the point where it is more convenient than driving would persuade people to use public transit over private. They could make the public transit system quicker, easier to access, and cheaper.
3. Deodorant provides many positive social externalities, such as making everyone smell better. However, aerosol deodorants have significant negative externalities because of the harmful chemicals they release.
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@ Daniella:
I agree with most of your points, however, I don't think promoting taxis would help reduce congestion. If everyone took a taxi there would be just as much congestion as if everyone drove a car. I think buses and metros are a better solution.
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1. Why is chewing gum not banned in every country, if it produces spill over costs?
chewing gum produce some positive externalities as well as negative externalities. Chewing gum helps with teeth decay, but also causes littered sidewalks. The government has to decide weather the benefits outweigh the costs. In developed urban areas like new york city, it might the spillover costs may outweigh the benefits.
2. What are some possible alternative government interventions to reduce traffic congestion in Singapore?
offering tax incentives for people who use public transportation and encouraging employers to give their employees extra pay for using public transportation.
3.Can you apply the concept of externalities to the consumption of deodorant?
Why, yes. When one wears deodorant it creates a positive externality of the form of environmental cleanliness.
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# Talia_Greene
"Many people prefer the social benefits, such as preventing tooth decay. Also, spillover costs are not the only concern. Sometimes, human rights take precedence."
you are forgetting a major factor. Chewing Gum Companies employ people, and jobs are important to the government. Governments also might want to collect taxes on chewing gum.
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1) Chewing gum is not banned in every country because every country has different economical situation and culture. For example for Singapore chewing gums have bad effects on society. On the other hand, for another country it can bring a lot of job opportunities to develop its economical system. Also the opinions of governments change from country to country. As we know Singapore is a really small country so it is very easy to discuss and to make a decision about banning for a government. However, in big countries like Canada it is very hard to make a law about a chewing gum by government. Also the social benefits of chewing gum are much more than the social cost like preventing tooth decays.
2) Addition to the strategies of government about increasing the price of having cars the government can offer some new opportunities of public transportation. Also they can decrease the price of public transportation so that people can prefer public transportation instead of using cars. Also there can be some taxation on oil so that people can decide on giving up cars as it is very expensive.
3) The consumption of deodorants has positive externalities in most of the countries. Because most of the people it is very necessary product to use as it prevents bad smell even if it pollutes the world.
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@tomoya_sekine I think you really made a good point about the third question. Deodorants are very harmful for the ozone layer and it makes pollution. On the other hand, I think its negative externalities are less than the positive ones because consumers are buying it no matter what.
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Why is chewing gum not banned in every country, if it produces spill over costs?
One of the basic reasons of the fact that the chewing gum is banned in a country is the possibility of the pollution in the streets. If a country is able to clean the roads or it has some other priorities to concern about, then chewing gum is not banned in that country. Moreover, chewing gum market would need to be closed up if it is banned in every country. The consequences of this situation would be like that many people would be unemployed and there will be big troubles in the markets like companies in debt. Also, chewing gum has some benefits about health. That is why, it is not banned in every country.
What are some possible alternative government interventions to reduce traffic congestion in Singapore?
The government may enhance the public transportation like a change in the pace of transportation or increasing the number of stations. Moreover, more taxes can be imposed in the petrol prices in order to have a sharp decrease in demand of ownership of cars.
Can you apply the concept of externalities to the consumption of deodorant? Draw a graph to show the private and social equilibriums.
I think we apply the concept of externalities to the consumption of deodorant. Usage of deodorant has both drawbacks and some benefits, in other words, some negative and positive externalities. Almost each and every deodarants are not environmentally-friendly. However, they prevent bad smells, make people feel nice, and can be used for luxury. That is why, both indiviuals and the society can benefit or be harmed from the situation.
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@Dogan_Can_Ozcan
I partially agree with your 3 rd answer. Yes, I admit that deodorant has some drawbacks like damaging the ozone layer. However, we should not underestimate the benefits of deodorant. For example, it makes people feel clean and nice. It has some social advantages.
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1. Why is chewing gum not banned in every country, if it produces spill over costs?
If chewing gums banned in every country then the gum industry will be over which means unemployement, a decrease in total income etc. By the way chewing gums are good products for our teeth health, it prevents decaying.
2. What are some possible alternative government interventions to reduce traffic congestion in Singapore?
Some possible alternative government interventions can be decreasing the prices of public transportation and there can be some taxes on petrol with these the demand for having their own cars will decrease. The number of the cars will decrease and the traffic problem can be solved.
3. Can you apply the concept of externalities to the consumption of deodorant? Draw a graph to show the private and social equilibriums.
Consumption of deodorant can be both positive and negative externalities. If we think about the smell issue then this is positive because it has benefits but if we consider deodorants in terms of environment it is dangerous that’s why it is negative. For the graph MSB is greater than MPB.
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To Asucan_Odcikin
I really liked the way you explained the first question in detail. The reasoning that you gave about the countries' situations are so true. In terms of the size of the countries the chewing gum industry is changing.
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1. Why is chewing gum not banned in every country, if it produces spill over costs?
I feel that this is because although chewing gum has some negative externalities, it also has many benefits. There is a whole industry that is behind chewing gum, so that means jobs and economic growth and the movement of money. Also, it was mentioned in the article to increase saliva production, which leads to better teeth, allowing for healthier citizens.
2. What are some possible alternative government interventions to reduce traffic congestion in Singapore?
Singapore could do a couple things in order to reduce traffic congestion in their country. They could tax things that go along with owning a car, such as gas or car washes. This would make owning a car even more unattractive to the consumers. They could also lower the prices of public transportation, and also make it more readily available. This would make owning a car seem unnecessary.
3. Can you apply the concept of externalities to the consumption of deodorant? Draw a graph to show the private and social equilibriums.
There are both positive and negative externalities that go along with the use of deodorant. There are negative, as it can be harmful to the environment because of the aerosols and harmful chemicals. Despite this, there are many people who use it, because there is the positive externality of smelling good, and feeling/being attractive.
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@# Fabian_MontoyaFendt
I think what you meant to say by your answer to number 3 is that the social costs are much less than the social benefits? If that is the case, then I agree with you. With today's technology, the pollution that happens because of deodorant is very small, when the social benefit of everyone smelling pretty good, is relatively large. It allows for people to all be open to meeting new people, and more easily stand to be around each other.
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Why is chewing gum not banned in every country, if it produces spill over costs?
What are some possible alternative government interventions to reduce traffic congestion in Singapore?
Can you apply the concept of externalities to the consumption of deodorant? Draw a graph to show the private and social equilibriums.
Chewing gum isn't banned in every country now that every country has its own and different criteria from the rest. Then, the gum is not a product that leaves a lot of profit.
Some possible alternative government interventions to reduce traffic congestion in Singapore might be, establish a limit for the selling of cars in order to avoid these congestions.
No, because it is a product that the people buy if they want to. It is not necessary of live or death, but it is if you would like to smell nice.
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@Brian DiLaura
I agree with you when you say that they could tax things that go along with owning a car. This is because this would stop a little the amount of cars sold, and the people will start changing the ways of going from place to place.
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Why is chewing gum not banned in every country, if it produces spill over costs?
Not all countries value the externalities equally, in case of chewing gum some countries might consider the benefits of consumptions of chewing gum more then the negative externalities.
What are some possible alternative government interventions to reduce traffic congestion in Singapore?
The government might put taxes on petrol so that it will more expensive for people to drive and that might encourage them to drive less. The government might also encourage people to use the public transport system more.
Can you apply the concept of externalities to the consumption of deodorant? Draw a graph to show the private and social equilibriums.
Deodorant has more benefits from consumption than it has negative externalities. So consumption of deodorant has more MPB than MSB, which means that it has more private benefits than it has costs to the society.
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1. ?f chewing gums are banned in every country chewing gum industry would crash but it produces a employment and have a benefit to teeth.
2. car-pooling is a good idea. especially for students who are going to the same school and living just within the area.
3.using deodorant will affect the externality when the pople use the deodorant it makes a good smell and the other people will also benefit from this.
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@dilan gunes
you are right about all points. on the graphs MSB is greater than MPB.
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@gökce gündüz
You are right about all points. Especially the car pooling idea .
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1) Why is chewing gum not banned in every country, if it produces spill over costs?
Chewing gums aren’t banned in every country even if it has spill over cost, because it has several effects . For example; chewing gums are have a significant role on the economy and health of human(to reduce chance of tooth decay). Moreover, many people earn money from this sector.
2) What are some possible alternative government interventions to reduce traffic congestion in Singapore?
Putting taxes on the oils will have effect on the number of the individual cars on the roads. Moreover, decreasing the price of the transporting cars will decrease the number of cars in the traffic.
3) Can you apply the concept of externalities to the consumption of deodorant? Draw a graph to show the private and social equilibriums
Using deodorants can be known as negative externality, because it is dangerous fort he environment.
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1. Why is chewing gum not banned in every country, if it produces spill over costs?
It is about it has some economical benefits which is about producing employment area and it is good for human health especially for teethes.
2. What are some possible alternative government interventions to reduce traffic congestion in Singapore?
They can use taxation to reduce traffic because they can increase taxation on personal cars so there will be less personal car in traffic so it would be reduce traffic congestion and also it is beneficial for environment. Another thing can be increasing prices of fuels so people may use other transportation vehicles instead of their personal cars.
3. Can you apply the concept of externalities to the consumption of deodorant? Draw a graph to show the private and social equilibriums.
Using deodorant is dangerous for the environment.
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1.) Even though it produces negative spillover costs, chewing gum is not banned in every country because its industry is one that is demanded by many people and it can lead to great profits by a large firm. It can help stimulate the economy. Also, there are many positive healthy effects to chewing gum, like the boost of saliva which helps prevent tooth decay.
2.) Some possible alternative government interventions to reduce traffic congestion in Singapore are increasing the price of petrol, regulating public transportation and decreasing its costs, imposing an import quota on foreign cars, and increasing the awareness of the dangers of too much toxic emission released into the air by cars.
3.) By applying the concept of externalities on the consumption of deodorant, there are many positive externalities like improving the smell people around you have, increasing awareness for personal hygiene, and increasing the participation in sports as people won’t be as self-conscience over their odor.
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@Muhammet_Murat_Sekban,
I agree with you point on the negative externaility on the environment by the consumption of deodarant. However, I would like to point out that there are also many positive externalities like improving the smell people around you have and increasing awareness for personal hygiene.
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Chewing gum is not banned in every country because only in Singapore do they believe the negative externalities are sufficient justification to ban it. Schools are often of the same mindset. However, some recognize that there are positive externalities, like the increased saliva mentioned above.
Other strategies could be regulations on who can drive or when. Raising the driving age or setting curfews on driving could get more cars off the road. The government could also increase the supply of substitute goods or subsidize them, such as their public transportation.
A positive externality of consumption of deodorant would be that people smell better.
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@Muhammed Emin Uylas
How is using deodorant bad for the environment?
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1. Why is chewing gum not banned in every country, if it produces spill over costs?
Because the Singaporean Government has actually taken notice and has decided to intervene with the consumption of gum. It causes minor unemployment in other countries. Other countries have not banned it because as the text says "reduce chance of tooth decay" so it reduces medical costs in some ways.
2. What are some possible alternative government interventions to reduce traffic congestion in Singapore?
Bigger vehicles contribute much greater to traffic congestion and the government can increase insurance on them. They can also tax fuel and make it more expensive to drive cars. Another alternative is to improve the transportation system (i.e. add trams and trains) and make it more accessible and efficient. Putting restrictions on how many cars one family can have will also reduce traffic congestion.
3. Can you apply the concept of externalities to the consumption of deodorant? Draw a graph to show the private and social equilibriums.
Yes, because for the consumer it has a positive benefit but for the environment it contributes to the emition
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*emission of greenhouse gases so it has a negative spill over on society. But it also has some positive social benefits because it covers up bad smells and you dont have to sit next to a stinky person.
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Why is chewing gum not banned in every country, if it produces spill over costs?
- The gum market is very large in several countries and creates some very large profits for the firms that produce them. As stated above, gum also has spillover benefits such as the production of saliva and a reduced chance of tooth decay.
What are some possible alternative government interventions to reduce traffic congestion in Singapore?
- A possible alternative government interventions to reduce traffic congestion in Singapore is to provide incentives to the people such as a tax break if they do not own a car. This would therefore create less demand for cars since people would be benefiting from tax breaks. Another possible alternative would be to create comfortable and cheap public transportation to discourage the consumption of cars by the Singaporean population.
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1. Why is chewing gum not banned in every country, if it produces spill over costs?
Chewing gum produces spill over cost but in Singapore because the market of gum will be severely affected and can cause major unemployment. Despite the spill over cost is also has its own positives such as keeping away tooth decay and causing betterment for individual human health which is beneficial for the society.
2. What are some possible alternative government interventions to reduce traffic congestion in Singapore?
According to me, the government is already heavily charging customers on their cars, they can also increase the amount of insurance in case of car accidents- this way they will have to pay more instalments to keep the insurance going and will be careful on the road while driving- also not everybody will be able to afford such a heavy insurance and not buy cars. Public transportation should be free in certain time of the days specifically at times when there is more traffic on the street- this way people will choose to leave their cars behind and travel by a train or a bus in order to avoid traffic on the road.
3. Can you apply the concept of externalities to the consumption of deodorant? Draw a graph to show the private and social equilibriums.
The consumption of deodorants has a positive externality on the society, as body odour is prevented and people stay fresh. Here Marginal social cost will equal to Marginal social benefit at Q*. At q1 marginal private benefit will intersect with marginal social cost which will gain external benefit.
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@ Muhammed Emin Uylas
It is true that deos are harmful for the environment but they are also helpful to the society.
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1. Some countries might not banned chewing gums in their country, because banning chewing gum would be considered to be interrupting people's freedom to chew gum. Though there are some spill over costs, such as amount of money costs to remove gums on the street and buildings, those nations that didn't ban the chewing gum might thought that guaranteeing freedom to chew gum is more important than the spill over costs that the government should pay.
2. Government could give benefits for people who use public transportation system instead of imposing extremely expensive tax to people who owns private cars. This benefits would give impression that using public transportation is the way to save their money and this would help the government to increase the usage of public transportation.
3. The consumption of deodorant would have positive effect in society, because its consumption helps people to erase unpleasant body odor, which means there would be no situation that people suffering from other's oder during summer.
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@Ashini
I like the way you connected the chewing gum ban with the unemployment and such other ideas
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1.Why is chewing gum not banned in every country, if it produces spill over costs?
2.What are some possible alternative government interventions to reduce traffic congestion in Singapore?
3.Can you apply the concept of externalities to the consumption of deodorant? Draw a graph to show the private and social equilibriums.
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1. Because chewing gum can reduce the tooth decay and it is helpful for economy. It is really cheap so that even the poor people can buy it if they cannot afford teeth brushes for example.
2. For the petrol, there can bi high taxes, then people won't be able to afford it. They are going to try to use the public transportation. By public transportation, more people can be transported at a time and it will reduce the congestion. Also governemnt can make advertisements to encourage the usage of the public transport.
3. There is usually negative externalities when a deodorant is used. For example it pollutes the environment, it damages the atmosphere and the ozon layer, so it affects the global warming in a very negative way. This can be the main negative externality.
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@ Muhammed Emin Uyla?
It could have been better for you to at least mention about how the environment is polluted this is a really short answer I believe and it does not explain muc.
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2. What are some possible alternative government interventions to reduce traffic congestion in Singapore?
The government can reduce taxes for public transportation. This will lead people to prefer public rather than having more cars which will cause traffic congestion. Also government can encourage the insurance on cars because those insurance contracts are expensive and may have an disincentive effect on consumers to buy cars.
3. Can you apply the concept of externalities to the consumption of deodorant? Draw a graph to show the private and social equilibriums.
Deodorants have positive externalities since they provide smell, utility for consumers.But in long period , it causes toxic gases to me given out to atmosphere which will cause cancers, mutations later on society. Its marginal social cost is bigger than its marginal social benefit.
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