EXTERNALITIES

Basic Question
How to control the damage of environment as

an effect of factory defilement?

How to overcome the issue of environment
damage under public economic ?
Who is the responsible for the economic
resource/natural resource?
In term of education budget policy, how to
achieve the efficiency level?

Market
Price
Supply
(private cost)

Equilibrium

Demand
(private value)
3

Teori Ekonomi
0
1

QMARKE

Quantity

Market Failure
Market mechanism assumed as the most

efficient of economic decision

Market failure always existence in economic
The damage of environment is one of market
failure
Negative Impact to others economic agent in
market is externalities

Externalities concept
Economic Decision or activity causes

negative or positive effect on other

economic agent or stakeholders
Externalities is when the other eco agent
who was not involved in such decision
affected, positively of negatively
Example: Soap factory = biosphere
damage

Biosphere case
Cost = negative externalities = production

cost + transaction cost + ..

Biosphere damage : community and
government cost
The Factory decision : No extra cost, only
income and benefit of production

Education case
The economic decision to give more benefit

to others agent : diminish their own benefit

Example: Education and national security
(pay by taxer)

Externalities: Negative and

Positive
Economic Decision or activity causes negative

or positive effect on other economic agent or

stakeholders
Externalities is cost or benefit of production cost
as a result of production process affect to other
producent or other consumer
Negative Externalities : cost external of
production or consumption process
Positive
Externalities: Benefit external of
production or consumption process
8

Discuss: these negative

Externalities

Traffic Jam
Coastal erosion
Air pollutant
Criminality
Anti-social Behaviour
smoking

Discuss these positive Externalities

to socio
and
economic
Research
Education
Philanthropy

Eksternalitas of education...
Social and economic (externalities)
Contribution to economic growth
spill over to other individuals, firms, region,

etc. (overall increase of productivity)

Indirect benefit: public health, low
criminality, political participation, social
cohesion (shared values and commitment
to a community)

Eksternalities Network
Sering suatu benda lebih bermanfaat jika

dipakai bersama secara collective. Ini juga

sering berakibat pada perlunya standard
atau bahkan natural monopoly.
Masalahnya

kemudian adalah bagaimana

membuat standar tersebut agar sesuai
dengan keinginan collective. Inovasi ke arah
standard dan memenuhi keinginan collective
berujung
pada
penemuan
technology,
inovasion, yang disukai bersama

Contoh:
Sebuah blakberry tidak akan bermanfaat jika hanya

dipakai oleh seorang saja karena tidak ada network

yang dapat dilakukan.
Tetapi sepuluh blackberry
akan bermafaat untuk menjalankan komunikasi dan
jaringan diantara 10 anggota tersebut. Semakin
banyak anggota pemilik blackberry, maka semakin
besar dampak eksternalities positifnya
Memiliki satu raket di kota tidak akan bermanfaat

karena tidak bisa dipakai untuk bermain sendiri. Arti

dari rakte tennins tersebut akan besar jika banyak
yang
memiliki,
membentuk
klub,
membuat
pertandingan, dst
Inilah yang disebut eksternalities jaringan

Eksternalities = economic scale

concept
Economy of scale : maximization of

production = increasing benefit +

membuat kopi yang banyak sehingga
semakin murah dalam production dan
semakin
bermanfaat
dalam
pemakaiannya
Eksternalities

jaringan atau Network

externalities berarti ada manfaat yang
banyak jika semakin banyak orang
memakainya

SUMMARY: 4 JENIS
EKSTERNALITIES

Eksternalities
Eksternalities
Eksternalities
Eksternalities

production Negative
production Positive
consumption Negative
consumption Positive

CONTOH:

Eksternalitas Produksi Negatif

(Kerusakan Lingkungan, polusi, kebisingan,

kemacetan, dll)
Eksternalitas Produksi positif
(Contoh: taman bungan selain indah, juga
memproduksi kombang yang bisa
menyerbukkan dan produksi madu)

CONTOH:
Eksternalitas Konsumsi Negatif
Merokok menimbulkan polusi di sekitar
Kebisingan pesta mengganggu pelajar lainnya

Eksternalitas Konsumsi Positif

(Vaksin flu, restorasi apartemen, pendidikan

dan penelitian oleh perusahaan)