Instructions for Homework: Externality, Market Failures and Economic Regulation
Please write a short essay on economic externalities, market failures and economic regulation. You should address at least the following issues in your essay: What are externalities? How do they cause market failures? What kind of regulations is necessary to correct for these kind market failure?
Please make your essay brief and clear to earn high marks. Please don't use the question-answer format, rather it should be an essay which coherently at least covers all the above mentioned required elements (Indeed, the three are internally related, i.e., one causes the other). It is strongly suggested that after some general discussion on the topics, you then use a specific example to illustrate your ideas. Use graphs to illustrate your points if necessary.