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Nilanjan Bhowmick AIR 3, CSIR NET (Earth Science)
Ravindra nath mahto
Firstly, we will try to understand the negative externality. Then, we can answer this question very easily. So, negative externality is the external bad impact or cost on those peoples' who are neither directly engaged in production or consumption. For example, if I smoke in public place then I surely harm my body by smoking but I also harm the nearby persons to me. This is called negative externality in consumption. That's why if I create negative externality then I must be charged in such a way so that those people can be easily compensated. Therefore, the price should be charged equal to the social cost in case of negative externality.