Externalities are considered to be any impact on people who are not involved in an economic transaction. Externalities can be positive or negative. In the healthcare industry, there are positive and negative externalities due to the care that’s provided to other people. The people who are not directly involved in the treatment benefit from others being healthy because it decreases the chance of them catching the same illness. This is one of the many positive externalities that exist from others receiving health care services.
Additional positive externalities include health affects wealth, technology, and vaccinations. “Healthy workers are absent from work less and are more productive workers. A health care market that effectively helps workers can lead to positive economic gains (“Externalities”, 2016)”. Technology evolves as time goes on and the research involved in generating new solutions, has dramatically increased the knowledge and technological capacity of society in general (“Externalities”, 2016). This affects many different industries, including the healthcare industry. The research and development in health care affects the technological efficacy in other markets (“Externalities”, 2016). Vaccinations result in immunity for a lot of people, or essentially the fact that many individuals will become immune and thus reduce the likelihood that everyone in the population will contract certain diseases (“Externalities”, 2016).
In contrast, a negative externality is antibiotic resistance. “An interesting byproduct of the newer solutions to medical dilemmas is the slowly growing resistance of antibiotics in bacteria (“Externalities”, 2016)”. The person who is affected by the negative externality concerning the ...
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...t they could cause an outbreak. Consequently, their decision affects the entire community as well as others they may come in contact with on a daily basis.
Externalities directly and indirectly affect people when an economic transaction occurs. Externalities are either positive or negative. Every industry is affected by externalities, including the healthcare industry. The positive and negative externalities of healthcare is due to the care that’s provided to individuals. Even people who are not directly receiving the treatment benefit from others being healthy. This is because it reduces the chance of them catching the same illness. Some of the positive externalities include health affects wealth, technology, and vaccinations. Positive externalities typically do not require mitigation. However, subsidies would help the directly and indirectly affected individuals.
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