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Positive and Negative Externalities

The Government monitors and regulates businesses in both the public and private sectors, to ensure they are complying with Federal, State and local rules and regulations.  The result of these regulations can be referred to as positive or negative externalities.  

Provide an example of positive and negative externalities in the police (public) sector. What kind of impact can these externalities have on a budget and the people responsible for creating the budget?

Our discussion the individuals response.  Need the bad and good of response list references thanks

DA (week 2 Discussion 1) 

Externalities are products, influences, and ramifications from business production.  When viewed from the influences standpoint, one must consider the over-the-road trucking business.  Fuel taxes are large because of the carbon used and pollution generated to move products all over the country.  The trucks moving and producing emissions or pollution is a negative externality.  The negative externality, if left unregulated would allow the trucking business to not consider the factor when charging for moving items.  When a trucking business looks at the costs and considers the impacts of the influences, they charge more to cover the costs, which is transferred to the consumer.  The consumer is then impacted by the negative externality, not only in costs, but also in the pollution generated.  There are many external factors that are influenced by government regulation in trucking, but the positive external factors are also there.  The costs may be high, but because the trucking is there, more people are able to receive goods.  So essentially there is a positive and negative that is being influenced by the government and the public’s need for products (Mikesell, 2011).  Benefits are outweighing the costs of regulation.

A positive externality can be the traffic enforcement of policing.  Some may see this as a revenue generator, but the external influences are applied by police presence.  This function of law enforcement has ramifications, such as citations, to the public, but it also should decrease accidents, thus providing the positive externality.  The benefit of traffic enforcement far exceeds the negative externality of unregulated traffic which is deaths and injury caused by DUI driving, speeding, failing to yield-stop-signal, and DUI-D driving.  The police officer or traffic enforcement officer is tasked by the local government to regulate these activities by the public and the results can be seen as a positive externality.  The negative externality of this function is the costs to the public.  The government collects taxes from citizens which then is used to govern or patrol them (Mikesell, 2011).  The costs are high if the traffic laws are not enforced, but they are also high when considering paying taxes. 

Many times in law enforcement the public complains when there is a particular traffic issue where someone gets hurt or killed, and an outcry is made that should be heard by the agency responsible.  This then requires a cost to the agency or entity governing this area, which is then either funded directly or taxed into existence in the future.  The negative results observed by the public has then required them to submit to further costs so their demands can be met.


Mikesell, J. L. (2011). Fiscal Administration: Analysis and Applications for the Public Sector. Boston: Wadsworth Cengage Learning.

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