A positive externality is a benefit that arises from some
economic activity that accrues to the benefit of entities that were not actually
involved in that economic activity.
When it comes to roads,
many benefits are felt by people who did not pay for the construction of those roads.
For example, if a road is constructed in a city far from where I live, I can still
benefit from it if I go to visit that city and drive on that road. The building of that
road has benefitted me though I did not pay for it. Similarly, if a port city 180 miles
from my home builds more roads, prices may fall at stores in my town because transport
from that port to my town becomes easier. I benefit from the lower prices that came
about because of that road building even though I did not pay for the
roads.
In this way, easier transportation that comes with
having more roads can benefit even those who did not pay for the roads as a positive
externality.
No comments:
Post a Comment