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Date Submitted: 12/20/2010 04:15 PM
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SEGi COLLEGE MALAYSIA, KOTA DAMANSARA
REPORT ON EMISSIONS THAT CREATE GLOBAL WARMING CAUSES NEGATIVE EXTERNALITY AND METHODS TO REDUCE POLLUTION
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Contents Page
1. Question 1 - Introduction 1-2
2. Negative Externality 2-4
3. Global Warming 5-6
4. The Economics of Global Warming 7
5. Industries Affected by Global Warming 8
6. Question 2 9
7. References 10
List of Figures
1. External costs and benefits 2
2. Negative Externality Graph 3
3. Positive Externality Graph 3
4. Greenhouse Effect 6
5. Ice Thickness 6
6. Estimate of Damage Cost of Climate Change 7
QUESTION 1
1. INTRODUCTION
Externality Background
In economics terms, an externality is defined as a cost or benefit that is imposed on somebody that is neither the seller nor the purchaser of the product or service in question. An externality exists when one individual's production (or consumption) affects the production process (or well-being) of another, in the absence of any market transaction between them.
Externalities may be positive (conferring benefits) or negative (imposing costs). They may also be either uni-directional (where A imposes an externality on B, but B does not on A), or bi-directional (where A imposes an externality on B, and B likewise on A). An externality occurs when a decision causes costs or benefits to third party stakeholders, often, although not necessarily, from the use of a public good. In other words, the participants in an economic transaction do not necessarily bear all of the costs or reap all of the benefits of the transaction. For example, manufacturing that cause’s air pollution imposes costs on others when making use of public air. In a competitive market, this means too much or too little of the good may be produced and consumed in terms of overall...