My question is this: Ringo loves playing rock n roll at high volumes. Luciano lo

Question

My question is this: Ringo loves playing rock n roll at high volumes. Luciano loves opera and hates rock n roll. Sadly, they are neighbors in an apartment complex with paper thin walls.

I have to identify the externality here, along with coming up (thinking as the landlord) what a good comand and control policy might be, determine whether the policy would actually lead to an ideal outcome.

I'm stuck completely... I am new to this subject and am not even sure where to begin. Any help or suggestions would be wonderful! Thank you!

Explanation / Answer

a. It's called negative externality because Ringos's music will disturb Luciano and vice versa. For externalities, ask if it's good or bad. If it's bad, it's usually negative, and if good, positive. Wikipedia has a very thorough article on it under "externality". b. The landlord can make a house rule - no music after 10:00 pm, no music at all, whatever he wants. It will lead to inefficient outcome, but it's possible to keep both of them semi-happy while one might leave to somewhere else otherwise, or both very unhappy otherwise. Is it the best outcome? Well, if it leads to the most people living there, yes from the landlord's point of view (since he is making the rules, his view is what matters). However we don't know if the rule itself, or the other person leaving is more likely to cause issues.

Related Questions

Navigate

• Browse (All)
• Browse M
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.