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Use of Robots as a Positive Externality
The use of robots by industries to replace manual labor has highly impacted the current economy. The robots have increased the level of productivity for companies and eased accessibility to products for the company. Free markets have therefore over-allocated their resources to this technology due to its promising results. Unlike human labor, robots have a faster production rate, are cheap to maintain, and reduce the cost of production for company goods. They have also brought the increased quality of production, and research and development are even promising more to the industry. The US government should subsidize companies like Cognex and KION that are revolutionizing this industry. I should also provide rights to the robotics industry and patent new inventions within the industry. The government has a huge role to play in correcting externalities. The government should tax the negative externalities to ensure social cost does not outweigh the private cost. It should also offer subsidies to externalities that bring spill over benefits. Through support, they help shift the demand/benefit curve to the left, an illustration of the lower social price at each quantity.