Provide examples of negative externalities.

Negative externalities refer to the costs or negative impacts imposed on third parties who are not involved in a transaction or activity. These external costs are not accounted for by the parties involved in the transaction, leading to an inefficient allocation of resources. Here are some examples of negative externalities:

1. Pollution: Industrial activities that emit pollutants into the air or water can cause negative externalities. For instance, a factory releasing toxic chemicals into a river can harm aquatic life and affect the health of people downstream who rely on the water for drinking or irrigation.

2. Traffic congestion: When too many vehicles use limited road infrastructure, it leads to traffic congestion. This not only causes delays and frustration for drivers but also imposes costs on other road users who experience increased travel times and reduced productivity.

3. Noise pollution: Activities such as construction, airports, or loud parties can generate excessive noise, causing discomfort and annoyance to nearby residents. The negative externalities of noise pollution can impact people's quality of life and overall well-being.

4. Smoking: Secondhand smoke from tobacco consumption is a negative externality as it can harm the health of non-smokers who are exposed to it. This can lead to increased healthcare costs and reduced productivity due to illness.

5. Deforestation: When forests are cleared for agricultural purposes or logging, it can have negative externalities such as soil erosion, loss of biodiversity, and increased greenhouse gas emissions. These impacts affect not only the immediate area but also contribute to global environmental problems.

6. Congestion pricing: In urban areas with limited parking spaces, the negative externality of congestion can be addressed through congestion pricing. By charging drivers for entering congested zones during peak hours, it aims to reduce traffic congestion and improve overall traffic flow.

These examples illustrate how negative externalities can arise in various economic activities and sectors, highlighting the importance of considering these costs when making decisions to achieve a more efficient allocation of resources.