The effects of business are not only marketer making profit and consumer getting satisfaction

from the products or the Shareholder’s wealth is maximized, there are externalities as well.
Externalities are defined as effects on third person or society who is not directly involved in the
economic transaction (IMF, 2010). These are of two types: Positive and Negative Externalities.
Positive externalities are those which result in benefit to a third person or society, for example
residents living near a music school enjoy free performances nearby or well informed and aware
society due to education. Negative externalities are unwanted costs imposed on society and its
people, for example pollution caused by industries, global warming and adverse psychological
effects of internet overuse.

As government is the ultimate watchdog for the society, it comes into action when there are
imbalances in business practices and internalizing the cost don’t suffice as enough measures to
counter those imbalances. Such a scenario is called market failure when the price of a product is
inconsistence with its useful value to the society as whole. Government intervenes by way of
providing subsidies, better infrastructure to support products with positive externalities and
imposing restrictions, tightening regulations, conducting audits and advertisement for negative
externalities.

As reported in ABC News (2018) article by Mark Kearney the grand paintings on big silos in the
small town Brim in West Victoria has bring lot of positive experiances to the people living there.
Painter Guido van Helten painted the silos in the town with colourful and meaningful paintings,
it gained tourist attraction and people started to visit the town, it brings business to the town as
visitors would pour oil in their cars, sit at restaurants drink coffee or beer. The society of the
town love to get touched by these visitors are they bring in business and socially desirable
benefits to the society. The initiative by the artists and governements have led to the revival of
town.

In another report in The Sydney Morning Herald (2018) Peter Hannam highlights that thermal
power plants powered by coal in the NSW region have led to high air pollution and over the past
created an atmosphere vulnerable with deadly disease. Residents are contaminated by the tiny
particles mixed in the air that are blown in by humans while breathing and they reach lungs and
every other part of body through the blood flow. This led to severe health hazards - 279 annual
deaths, 233 underweighted babies born every year and 369 cases of diabaties T2 are discovered.
These plants are scheduled to close down in stages form 2022 to 2042, these will make damage
and the magnitude of deaths and diseases would be 10 times in 2042. The report mentioned that
the permissible toxic emmision levels in Australia are much higher than in US, Europe and
China, a bill is under dicussion in the NSW parliament over reducing down the limit of toxic
emmision in the air.
References
ABC News. (2018, July 3). Art silos become a 'bit of a lifesaver' for struggling rural
communities. Retrieved from ABC News: https://www.abc.net.au/news/2018-06-
30/rochester-cashes-in-on-silo-art-trail-explosion/9918800
IMF. (2010, December). What Are Externalities? Retrieved from www.imf.org:
https://www.imf.org/external/pubs/ft/fandd/2010/12/pdf/basics.pdf
The Sydney Morning Herald. (2018, November 21). 'Scandal': NSW coal power plants will kill
thousands before they close. Retrieved from The Sydney Morning Herald:
https://www.smh.com.au/environment/sustainability/scandal-nsw-coal-power-plants-will-
kill-thousands-before-they-close-20181120-p50h66.html