Friday, September 02, 2022

Externalities of Dishes

I live in Lambeth, and, because our kitchen does not have much space, we have a jank setup for our dish drying. We toss a mat onto two burners on the stove beside the sink, and we use it to dry dishes. Now, say I wash my dishes and I place them on the mat to dry (sometimes its a lot of dishes). My PMC is the opportunity cost of the time washing dishes, and then my PMB is the clean dishes once they dry. However, by filling up the mat I create a negative production externality by leaving dishes on the mat that my roommates can no longer use. For simplicity's sake let's say I that I have one roommate, but the third paragraph in this blog points out how even small externalities--like those involved in dishes--can put strain on our day to day lives.

Coase might have an elegant solution to this problem involving M1, but I think my solution might be better. First, Coase: if I am liable for removing dry dishes by house rules, I can pay my roommate: let's say $10 dollars (if that happens to be the bargained price) to let me keep the dishes on the mat (and then he can remove them himself). If I am not liable for removing my dishes we don't have any house rules, and we are stupid, then my roommate can pay me those $10 and I will remove the dishes. Either way, the externality is internalized, and the efficient output is reached. Since my roommate is not an economist, this solution will be too much Econ for him to handle and is not optimal (Does his private marginal cost curve factor in the cost of doing Econ!? 'Tis a shame). Instead, my solution: the payment will occur in the form of exchanging dish removal duties. So he removes my dishes, and I remove his dishes, and we both correct each other's externalities. Only thing is, it becomes more complicated when you add two more roommates to the equation. Luckily, we are all friends and get along well, so transactions costs should be minimal. I think I have to call a house meeting now...

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