Ch 3

The concept of an externality being both positive and negative intrigued me, and brought about the question that is: if an externality is both positive and negative is it still a market failure? An equilibrium seems to appear in the long run, so to me in a strictly economic sense it seems to not be a market failure. The example Wheelan gave was smoking cigarettes which gives people second hand smoke but also makes social security costs lessen. Though I don't approve of smoking, or appreciating other people's deaths for personal gain this theory seemed to make sense in this case. This also begs the question to me as to how far externalities can be defined. Ethically speaking I do not like using positive and lung cancer in the same phrase, so what do economists truly think as positive externalities and where does it end?