Advantages and Disadvantages of the Baning of Somiking Inside Your Own Home
659 WordsFeb 19, 20183 Pages
According to the article, the Houston Housing Authority has placed a smoking ban on public housing properties, whereby “residents can no longer smoke inside their homes, nor within 25 feet of a main entrance”. This is an example of an externality, a side effect on third-parties caused by production or consumption activities. This is a negative consumption externality, where the marginal private benefits (benefits to consumers of consuming one more unit of a good) are greater than the marginal social benefits (benefits to society of consuming one more unit of a good. The externality causes welfare loss, a loss to society as a result of misallocation of resources, as shown in Diagram 1, where for every unit of output, marginal private benefits (MPB) are greater than marginal social benefits (MSB). The vertical difference between MPB and MSB is the external cost to society. For this reason, there is a welfare loss; the market overallocates resources to the production of cigarettes at units greater than Q/optimum, which is the socially desirable equilibrium, as there is market efficiency. However, because MPB represents actual demand, the equilibrium is at the intersection of S=MPC=MSC and D=MPB, at P/market and Q/market.
The reason the marginal private benefits of smoking are greater than the social ones is because smoking has external costs affecting others; they not only affect their own health and get lung cancer, but can also cause lung cancer to others.This is