Friday, May 1, 2009
Externalities !
It is like a consequence or effect not considered in analysis.
It can be positive or negative .
If there is an externality that affects the interests of
other groups of people or other decision makers,
it is referred to as a spillover.
For example, if you always walk along the corridor
to take the lift from your house,
you passed by your neighbour's house,
and she has a very beautiful small row of plants on the floor,
all the plants were blooming flowers and it is very beautiful !
After seeing that sight, you will feel more happy !
So it is considered a positive spill
over effect ! : ]
In another way, if you noticed that
all the plants outside your neighbour's house were decayed
and there is odors coming out from the plants,
you will feel very disgusted and ruins your mood .
So in this case,
it is considered a negative spillover effect ! : ]
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Negative/Positive?
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For me , i think that one negative externality in Singapore is,
the low-end foreign workers like, the Bangladeshis moving into Geylang,
all the flats around that area will drop in their prices .
It is because the locals will be afraid of them ,
and don't dare to stay near them.
Thus, the prices will be fluctuated !
Those people (Locals) living in the areas ,
they won't be able to sell their flats for a high price
if they want to get out of that area .
Thus, i think that the low-end foreign workers
moving into one particular area , and the property prices drops,
it is a negative externality !
However, it can be considered a positive externality as well .
Those people who are very poor, and don't have a roof over their head,
they might be able to afford a house now, because of the fluctuated prices .
So those poor will tend to benefit from it, if they don't mind moving into the area.
:] : ] : ]
Cheers,
Ronny xD
Labels: externality
We Loved1:01 PM
April 2008