Monday, October 13, 2008

Negative externalities and government action: Cars in China

An interesting clip from the BBC

a) What are the negative externalities that can be seen in the video clip?
b)Why do these negative externalities arise?
c) What actions is the government taking to reduce the negative exteralities?
d) From what is said in the clip, to what extent do you think the measures will be successful in reducing the market failure?

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