4 ms·

That should really depend on the contracts and negotiations between property owners, tenants, etc. Maybe you don't mind living next to that "eyesore" because it

That should really depend on the contracts and negotiations between property owners, tenants, etc. Maybe you don't mind living next to that "eyesore" because it's much cheaper and you can afford private schooling for your children. Everything is a cost/benefit, and people may be willing to sacrifice one thing for another, so have a little empathy.

davidw 13y ago
I think you missed the point of "externality": the people affected by the externality are not party to the negotiations. In other words, when I buy the house next to yours, and from one day to the next, decide to use it to store decaying pig shit in the yard, or manufacture high explosives, all of a sudden, you got something really nasty that you did not choose. It's not as if you chose to move next door knowing full well what goes on in my business. All of a sudden, the value of your house has dropped, and you haven't been compensated for it at all. I agree that zoning and restrictions should be regulated at a local level so that multiple solutions can arise, but it seems like trying to involve neighbors in contract negotiations becomes quite complicated quickly. The guy 2 houses down has seen his house fall in value too, although maybe not quite so much. The guy 20 houses away might still smell things on a bad day, so he's affected a little bit too, should he be included in negotiations as well?
- ahallock 13y ago
  I agree with what you're saying for the most part. I think, though, that people want to get along and social pressure can work for a lot of these situations. Regulations do not always work in your favor, though, and do not always protect people. For example, where I live in Cleveland, there used to be a rule that policeman (and I think most civil servants) had to live inside the city limits to work there. Once they removed the regulation, these workers sold their homes and left. The property value has dropped considerably as a result.

davidw 13y ago

I think you missed the point of "externality": the people affected by the externality are not party to the negotiations. In other words, when I buy the house next to yours, and from one day to the next, decide to use it to store decaying pig shit in the yard, or manufacture high explosives, all of a sudden, you got something really nasty that you did not choose. It's not as if you chose to move next door knowing full well what goes on in my business. All of a sudden, the value of your house has dropped, and you haven't been compensated for it at all. I agree that zoning and restrictions should be regulated at a local level so that multiple solutions can arise, but it seems like trying to involve neighbors in contract negotiations becomes quite complicated quickly. The guy 2 houses down has seen his house fall in value too, although maybe not quite so much. The guy 20 houses away might still smell things on a bad day, so he's affected a little bit too, should he be included in negotiations as well?

ahallock 13y ago
I agree with what you're saying for the most part. I think, though, that people want to get along and social pressure can work for a lot of these situations. Regulations do not always work in your favor, though, and do not always protect people. For example, where I live in Cleveland, there used to be a rule that policeman (and I think most civil servants) had to live inside the city limits to work there. Once they removed the regulation, these workers sold their homes and left. The property value has dropped considerably as a result.