External Cost


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Related to External Cost: External Benefit, Private cost

External Cost

The cost of a transaction to parties who do not directly participate in it. For example, a merger can drive a competitor out of business, which results in layoffs and reduced wealth, which can hurt a community. A transaction may result in a factory opening in one city and one closing in another. An external cost is also called negative externality. See also: Externality.
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6% Table 5/Effect of Taxation of External Cost Modal Split Internalization Ratio Truck Train Barge 0.
The market failures associated with fossil fuel alternatives produced external costs due to carbon emissions, with conservative values of $21/MW-h for coal, $13/MW-h for natural gas, and $19/MW-h for petroleum using an external cost of $20/ton, although the costs could be much higher if damages are >$20/ton.
The key question arising: does the fuel tax correspond to the external cost of CO, HC, [N.
When all firms are identical, then each firm overinvests if at the first-best level of investment the marginal external cost is smaller than the average external cost.
Without policy intervention, the so called external costs are not taken into account by transport users when they make a transport decision.
External costs appear when certain social and economic activity affects the part of the society which is not related with this activity and when this impact and caused consequences are not compensated.
Considering that no recent local studies of actual environmental impacts have been conducted in Estonia, assessments of damage cost to the environment caused by generation of electricity from oil shale are based on external cost calculations performed in ExternE-Pol projects [4].
The first row of Table III reports the average external cost of compliance per week across all firms.
23 million-picker amounts to 660 million rupees that is an external cost to the lowest income strata of society (Table 2).
Adjusting cost shares to more closely approximate a "Lindahl equilibrium," in which costs are shared in proportion to marginal benefits, would help get the approval of the landowners by reducing their external cost (but with an increase in decision-making costs).
However, external costs are of interest in connection with cigarette taxes and the issue of whether smokers are paying for higher health care costs.
With respect to heavy drinking, the estimated external cost of excess drinking is about 54 cents per typical drink.

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