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ECO/204 ECO/204 WEEK 4 DISCUSSION 1 -EXTERNALITIES PRINCIPLES OF MICROECONOMICS -ANSWER KEY

ECO/204 ECO/204 WEEK 4 DISCUSSION 1 -EXTERNALITIES PRINCIPLES OF MICROECONOMICS -ANSWER KEY
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ECO/204 WEEK 4 DISCUSSION 1 -EXTERNALITIES PRINCIPLES OF MICROECONOMICS

Discussion 1 - Externalities

It has been proposed that toll collection on the Massachusetts Turnpike, a key commuter route into Boston from the west, be discontinued. Proponents argue that tolls have long ago paid for the cost of building the road; now they just provide cash for tax bureaucracy. A number of economists are opposing the repeal of tolls on the grounds that they serve to internalize externalities. Explain this argument and discuss why the government often gets involved when finding solutions for externalities.

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