Seoul Metropolitan City in South Korea operates multiple public transportation providers that offer bus services within...

 

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Seoul Metropolitan City in South Korea operates multiple public transportation providers that offer bus services within the city. These providers purchase buses from bus producers, with wheelchair-accessible buses (see figure below) being priced higher than non-accessible buses due to their higher production costs. Consequently, the proportion of wheelchair-accessible buses in Seoul was below 3% by 2006. Recognizing an externality in the pricing of accessible buses, the Seoul Metropolitan City government decided to implement measures in the bus market to raise the ratio of wheelchair- accessible buses in Seoul. 1. Identify the type of externality involved in this case. 2. Suggest three possible measures that can be implemented and determine whether each measure falls under the category of Command-and-control regulation or a Market- oriented tool. Seoul Metropolitan City in South Korea operates multiple public transportation providers that offer bus services within the city. These providers purchase buses from bus producers, with wheelchair-accessible buses (see figure below) being priced higher than non-accessible buses due to their higher production costs. Consequently, the proportion of wheelchair-accessible buses in Seoul was below 3% by 2006. Recognizing an externality in the pricing of accessible buses, the Seoul Metropolitan City government decided to implement measures in the bus market to raise the ratio of wheelchair- accessible buses in Seoul. 1. Identify the type of externality involved in this case. 2. Suggest three possible measures that can be implemented and determine whether each measure falls under the category of Command-and-control regulation or a Market- oriented tool.

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The type of externality involved in this case is a positive externality A positive externality occurs when the production or consumption of a good or ... View the full answer