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Public Policy in Economics

In: Business and Management

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Public Policy in Economics
During week four Team C discussed the effects of externalities on market outcomes. The team reviewed different types of mergers - horizontal, vertical, and conglomerate mergers. The team also analyzed the effect of government interventions, taxation, and regulations on economic behavior.
Effect of externalities on market outcomes
When discussing the effect of market externalities, we are discussing how an organizations activity evolving around production or consumption may affect the well-being of personnel not involved. The term "externality" is derived from the reality that something or someone external of the action or transaction becomes affected by the production of consumption of the good.
An externality can be negative if an organization generates costs, such as harm or distress for uninvolved people.
Some examples of negative externalities are pollutants from tobacco smoking (second- hand smoke) and industrial facilities have a negative effect on the health and well-being of others. Smoking in restaurants has caused alarm such that smoking is banned from many eating establishments.
A beneficial activity to uninvolved personnel is known as a positive externality. Professional sports, or sports in general tend to play an important role model for young athletes. Celebrity athletes influence young children to train hard, compete well, and strive to be the next superstar.
Unforeseen, and third party influence, are the keywords; externalities can be positives or negatives on the market and consumers. Prices may increase or decrease, for example, Facebook because of some undisclosed and disclosed issues and what appears to be inside sharing. The shares did not have a positive impact on Wall Street. Prior to the going public, the hype was supportive, and everyone assumed it was a safe and would become a lucrative...

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