Identify the example of positive externalities ?

Carpooling transportation, perquisites by a company to its employees

The correct answer is option (3) : Carpooling transportation, perquisites by a company to its employees

Positive externalities occur when an economic activity generates benefits for third parties that are not directly involved in the activity. IN the case of carpooling transportation provided as a perk by a company, it can lead to reduced traffic congestion and lower emissions, benefiting the broader community beyond the employees directly involved.

Let's analyze the options provided:

1. Pollution in nearby river due to oil refinery: This is an example of negative externality because pollution imposes costs on people or entities not directly involved in the production or consumption of the oil.

2. Development activities causing Joshimath tragedy in Uttarakhand: This seems to describe a negative consequence (tragedy) resulting from development activities, so it's not a positive externality.

3. Land acquired by the government to construct highways causing many people to lose their livelihood: This describes a negative consequence (loss of livelihood), not a positive externality.

"Externalities: Externalities refer to the benefits (or harms) a firm or an individual causes to another for which they are not paid (or penalised). Externalities do not have any market in which they can be bought and sold. For example, let us suppose there is an oil refinery which refines crude petroleum and sells it in the market. The output of the refinery is the amount of oil it refines. We can estimate the value added of the refinery by deducting the value of intermediate goods used by the refinery (crude oil in this case) from the value of its output. The value added of the refinery will be counted as part of the GDP of the economy. But in carrying out the production the refinery may also be polluting the nearby river. This may cause harm to the people who use the water of the river. Hence their well being will fall. Pollution may also kill fish or other organisms of the river on which fish survive. As a result, the fishermen of the river may be losing their livelihood. Such harmful effects that the refinery is inflicting on others, for which it will not bear any cost, are called externalities. In this case, the GDP is not taking into account such negative externalities. Therefore, if we take GDP as a measure of welfare of the economy we shall be overestimating the actual welfare. This was an example of negative externality. There can be cases of positive externalities as well. In such cases, GDP will underestimate the actual welfare of the economy. "