Friday, October 26, 2007

How Many Miles to Wall Drug?

In my Intro to Economics class last week, I was lecturing on externalises, that is negative or positive consequences of economic transactions not involving the buyer or seller. I have been thinking a lot about externalises and advertising. Whether it is the annoying pop-up ad on the internet or the giant bill board distracting with something you don’t want . In the past the state of Oregon has put a limit on the number of bill boards (Link to Market Place story). It then starting selling a few billboard permits, which could then be traded. Since there was a limited number of permits, the price for a billboard soon went as high as $100,000. Recently Oregonians voted to change a related law that made it so anyone who had owned land before the billboard restrictions (or other land use laws) would be grandfathered in to longer having to follow those laws. This removed the limit on billboards, not surprising new billboards are popping up, the state legislature stepped in and changed the new law. A revote on the measure will be placed on the ballot on Nov. 6th.

This brings me back to my thought, how big are the externalises of advertising in our daily lives?

1 comment:

rjgitter said...

Nice reporting about billboards in Oregaon. I lobbied to limit them in Michigan almost 40 years ago, but lost my passion on the issue when a state legislator informed me they were an important source of income for some low income land owners in Northern Michigan. Anyway, another thought is the reason for today's comment.

Are pop-up ads an externality? I go to a site. They provide content and I view it. Why do they do it? Either they want to inform or persuade me, etc. or they are trying to make a profit. If it is a for-profit site, they provide content, ads and pop-ups and I decide if I read it or not. I think pop-ups are usually more of bundled good than an externality. They bundle the revenue enhancing pop-up with to content I want. A late colleague of mine, Blaine Grimes, used to call externalities third-part effects. With pop-ups there is not a third party, but just a content provided and viewer.

Dad