Return to Previous Page

Tour to Nandi Hills: Excited with Externalities

CASELET, MANAGERIAL ECONOMICS
ET Cases, 3 pages

Case Preview

Tour to Nandi Hills: Excited with Externalities

 

Deepa Sharma (Deepa) and Divya Lokhande (Divya) arrived at Bangalore School of Management (BSM) to pursue MBA. They met each other for the first time at the hostel where they were roommates. They struck an instant rapport with each other and became good friends.


The students gained a glimpse of the amount of hard work that would be required to successfully complete their MBA. The course commenced in the first week itself as soon as the students received their books. Students were required to start delivering their assignments and start appearing for tests from the second week. Deepa and Divya too got busy with their schedule – classes, assignment work, projects, tests, and extracurricular activities. Both were squeezing in most of their time to excel in their course work. By the end of the month they were on the lookout for an opportunity to unwind.............

Teaching Note Preview

Tour to Nandi Hills: Excited with Externalities

 

Synopsis

Two MBA first semester students – Deepa Sharma (Deepa) and Divya Lokhande (Divya) – go on an outing to Nandi Hills. On the National Highway 7 (NH7), they come across a toll gate where they pay a toll-fee. Later, they discuss the operation of a public good (highway/expressway) built on PPP model. When they reach Nandi Hills, they witness the misuse of another public good (Tipu Sultan’s Summer Palace, and other tourist attractions), which were littered and spoilt with writing on the walls, etc. This sets them to wonder about the cost of such negative externalities that arise out of the misuse of public goods.

The caselet introduces the participants/students to the concepts of Externalities, Public Goods and Private Goods. It also enables the participants to be sensitized to relate them to the concepts of Free-Rider Problem and Deadweight Social Loss when a public good is misused.

Prerequisite Conceptual Understanding (PCU)/Before the Classroom Discussion

The participants should be asked to read the following chapter to help them connect the concepts discussed in the caselet:

  • • Paul A. Samuelson, et al., “The Modern Mixed Economy”, Economics, 19th Edition (Special Indian Edition), McGraw Hill Education (India) Private Limited, 2014 – To understand the role of the visible hand of the Government in the economic functions of a market economy like increasing efficiency, curbing externalities and providing public goods

 

Case Positioning and Setting

The caselet can be used in either MBA or Executive MBA or Executive Development Programs, for the following modules/topics in the Economics course:

  • • In ‘Managerial Economics’ Course: Public Goods and Externalities – To understand the relevance and importance of the concepts of Public Goods, Private Goods, Positive and Negative Externalities, Free- Rider Problem and Deadweight Social Loss
  • • Corporate Responsibility Module: To sensitize the participants to the concepts of Positive and Negative Externalities and the Resultant Dead Weight Loss

 

Assignment Questions

  • I. What do you understand by Public Goods and Private Goods? Applying the ‘Rivalry-Excludability’ premise, analyze the road built on PPP model as outlined in the caselet.
  • II. What are externalities? What are the differences between positive and negative externalities? Using the caselet facts highlight the possible Deadweight Social Loss associated with littering and spoiling a public good like Tipu Sultan’s Summer Palace.
  • III. ...................

 

Preamble to the Caselet Analysis and Suggested Orchestration

The purpose of this caselet is to provide an in-depth understanding of the Public and Private Goods, and the nature of their Rivalry and Excludability applying them to the PPP model. The analysis of the second incident (littering and spoiling public goods) in the caselet introduces the participants to the concept of externalities – positive and negative. By understanding and gaining knowledge of the above concepts a manager would be equipped to make an effective decision. Accordingly, the suggested orchestration of this caselet is presented in Exhibit (TN)-I..........................

$3.37
Rs 0
Product code: ME-2-0006, ME-2-0006A

Abstract


This caselet is meant to introduce the participants/students to the concepts of Public Goods and Private Goods, Externalities and most importantly the managerial and policy implications of these economic theoretical constructs. When two MBA first semester students, Deepa Sharma and Divya Lokhande, go for an outing at Nandi Hills, they witness the operation of a public property (National Highway (NH7) built on PPP model) and misuse of another public asset (Tipu Sultan's Summer Palace and Fort). This caselet also enables the participants to be sensitized to a related concept of Deadweight Social Loss, i.e., a public good misused. Would an awareness and appreciation of these concepts help to induce the intended behavior amongst citizens? Most importantly, how does an understanding of the concepts of public goods, private goods and externalities help a manager in effective decision-making?



Pedagogical Objectives

  • To understand the differences between public goods and private goods and discuss the economic costs and benefits of the same including the Rivalry and Excludable nature of public and private goods
  • To understand the concept of Externalities - positive and negative - and examine how Deadweight Social Loss occurs, when a public good is misused and its impact on the society
  • To discuss and debate on the relationship between public goods, private goods, externalities and executive decision-making

Case Positioning and Setting

The caselet can be used in either MBA or Executive MBA or Executive Development Programs, for either of the following modules/topics:

  • In 'Managerial Economics' Course: Public Goods and Externalities - To understand the relevance and importance of the concepts of Public Goods, Private Goods, Positive and Negative Externalities, Freerider Problem and Deadweight Social Loss
  • Corporate Responsibility Module: To sensitize the participants to the concepts of Positive and Negative Externalities and the resultant Dead Weight Loss




This Case Pack Includes:
 - Abstract
- Caselet
- Teaching Note (**ONLY for Academicians)
$3.37
Rs 0

Related products




Request for an Inspection Copy

(Strictly for Review Purpose, Not to be Used for Classroom Discussion/Trainings)