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Economics Essay Telephone Masts

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Using the information in the data and your own economic knowledge, evaluate the economic case for and against governments attempting to influence how mobile phones are manufactured and used. (25)

The government should intervene in the mobile phone market to correct market failure due to the presence of negative externalities.
Negative externalities are detrimental third-party effects caused by the production and/or consumption of a good. A public good is a good provided free of charge to the consumer, by the government. A public good is non-excludable and non-rivalrous. A merit good is a good that gives positive externalities upon production and/or consumption. A merit good is non-excludable, yet rivalrous.
The negative externalities of mobile phone production stem from the production and consumption of the service broadcasting masts provide. The demand for broadcasting masts is derived from the demand for mobile phones. Broadcasting masts are said to cause negative externalities in the form of health-issues, such as cancer (Extract F, line 7). Negative health effects are a drain on government resources as healthcare is provided as a public good by the government, in the form of the NHS. An increase in cases of ill-health will cause an increase in the demand for the NHS, costing the government and tax payers money which is finite and must be put to its best use.
As the demand for mobile phones is highly inelastic (Extract E, Line 9), the demand for broadcasting masts is unlikely to decrease if the government introduce a tax on the production of broadcasting masts. The government could intervene through the use of legislation to ensure broadcasting masts are only put in place in less-populated areas, to decrease the amount of people affected by the radiation. This would decrease the amount of people who suffer ill-health due to the radiation emitted by...

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