1. Define or show understanding of 'external benefits' (positive effects on third parties). 2. Identify a first external benefit, such as reduced road congestion. Explain *why* this is an external benefit – who benefits and why are they a third party? 3. Identify a second, distinct external benefit, such as economic regeneration. Again, explain why this is an external benefit and who the third-party beneficiaries are.
Full Answer
External benefits, or positive externalities, occur when the consumption or production of a good causes a benefit to a third party. For HS2:
- **Reduced Congestion:** This is a classic external benefit of public transport. Every person who takes the train instead of driving reduces the number of cars on the road, which benefits all other drivers.
- **Regeneration:** Large infrastructure projects often spur development in the surrounding areas. This creates a more pleasant environment and economic opportunities for people who may never use the train itself.
- **Environmental Benefits:** A shift from cars and domestic flights to electric trains can reduce carbon emissions and air pollution, benefiting society as a whole.
- **Increased Labour Mobility:** While a private benefit for the worker and firm, it can also have external benefits by boosting the overall productivity and dynamism of the national economy.
Common mistakes
Describing private benefits (e.g., 'faster journey times for passengers') instead of external benefits. The key is to identify the benefit to a *third party*.
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