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lruhn010

Economics

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Is this an Externality?

For this assignment, please read the attached news story about litigation over odor and other nuisances from hog farms in North Carolina.Then answer the question, do you think that this counts as an externality?An important but often overlooked element of economic policy is the need to discover the givens of our economic models.We can apply the models developed in this class to examine taxing, regulating, or otherwise addressing externalities, once the existence of the externality is established, or stipulated.But before they can be stipulated, society first must consider and determine if there is an externality involved in such a case at all.Once decided, it is easy to recognized the consensus that, say, automobile exhaust is an externality.In contemporary or ongoing cases, there is more disagreement.

Do you agree with the verdicts awarding damages to the neighbors in this case?Do you think the jury awards are justified?Is the court system likely to result in good decisions in such cases?Why or why not?Are there other cases you might be familiar with where you think the court system produced good or poor decisions on whether to proceed.

Please write 2 to 3 pages on this topic.

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Explanation & Answer

Attached.

Running head: EXTERNALITIES and HOG FARMS IN NORTH CAROLINA

1

Externalities with Regards to Odor and Other Nuisances from Hog Farms In North Carolina
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Professor’s Name
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EXTERNALITIES and HOG FARMS IN NORTH CAROLINA

2

Externalities with Regards to Odor and Other Nuisances from Hog Farms In North Carolina
An externality is a condition where transactions impose costs on third parties who are not
involved in the transactions without compensation (Fisher, 2007). In the production of goods,
production entities may produce waste or by-products that negatively affects third parties, for
example, the neighboring communities. In such as a situation where the production process
imposes costs (negative effects) on third parties, Fisher (2007) argues that negative externalities
exist.
In the case of the Hog farm, the production p...


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