Landlords can pay landscaping firms to plant and maintain trees in the grounds of their blocks of flats. The trees make the grounds more attractive to tenants and improve air quality for people living in nearby streets.
Why may private landlords arrange less tree planting than society would choose?
The cleaner air makes private benefit greater than social benefit
Landlords are not paid for the better air enjoyed in nearby streets
The better air in nearby streets is a private benefit to landlords
The landscaping firms treat wages and materials as external costs
127 exam-style questions on OCR GCSE Economics 3.8 Limitations of markets, covering 3.8.1 Positive and negative externalities, 3.8.2 Policies to correct externalities, 3.8.3 Impact of externality policies, and 3.8.4 Costs and benefits of externality policies. Each one has a worked solution and a mark scheme showing where the marks go.