New answers tagged externalities
1
If an orchard and a beehive are situated close together, the bees pollinate the plants and the plants provide food for the bees. For the beekeeper this food is an unpaid factor in honey production and therefore a positive externality. For the fruit farmer the pollination is an unpaid factor in fruit production and therefore a positive externality.
Orchards ...
2
Not sure I understand your confusion.
Fruits provide external benefits worth $X$ to honeybees, honeybees provide external benefits worth $Y$ to fruits.
Knowing all this, farmers and beekeepers agreed that farmers should pay beekeepers amount $Z$, which probably comes close to making things even, meaning $X + Z = Y - Z$. Since $Z > 0$, $X < Y$.
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