The Automobile and the Environment :: Business and Management Studies

The Automobile and the Environmenta) Negative externalities are impacts on outsiders that aredisadvantageous to them. The externalities follow where the actions offirms or individuals have an effect on the people another(prenominal) thanthemselves. In the case of negative externalities the external effectsare be on other people. They are also known as external costs.There may be external costs from both production and consumption. Ifthese are added to the private costs we get the total social costs. Anexample of negative externalities would be the side effects ofproduction processes e.g. the pollution (noise, dust, vibration)endured by people living next to a quarry.b) From looking at the data we can see that since 1974 the cost ofpublic transport has increased quite rapidly relative to the base rateof degree Celsius compared to the cost of motoring which has steadily decreased.Initially it was the real cost of motoring which increased but by 1975it had started to decline and con tinued to do so until the after-hours1970s. It consequently increased quickly for a short period until 1982 endingup just above the base rate and remaining there until 1985. It and thensteadily declined up until 1994. Public transport on the other handhas been increasing since 1974. The real cost of rail travel hasincreased steadily with a few dips ending up in 1994 at just oer 165.The real cost of bus travel has also increased over the 20 year periodbut more gradually with a sharp rise in 1988 followed by a fall in1990 but then a final increase ending up in 1994 at just over 140.c) The fact that the cost of oil/petrol fell over the 20year period of1974-1994 and the cost of public transport rose is why there is such abig gap between them. The cost increases and decreases could havehappened for a number of reasons. The cost of petrol decreases whensupply is large(p)er than demand or when demand is low. Transport costscould have rose if the demand is too great for it or to increas erevenue for councils/government. If public transport needs to bemodernised/repaired than also putting the prices up enables extrarevenue to spend on these things.d) The classic way to adjust for externalities is to tax thosewho create negative externalities. This is sometimes known as makingthe polluter pay. The government needs to assess the cost to asociety of a particular externality. It then sets tax rates on thoseexternalities equal to the value of the externality. This increasescosts to customers by shifting the supply curve to the left.