POSITIVE AND NEGATIVE EXTERNALITIES OF MANAGEMENT ILLUSTRATED BY THE CASE OF AGRICULTURAL PRODUCTION

Abstract

This study investigates the problems of convergence between objectives of agricultural producers and consumers. It states that nowadays, increasingly often, the farmers’ products have no market price (are not marketed) but are either demanded by the society (positive externalities) or the society is interested in discontinuing their production (negativeexternalities). This study also outlines the key problems that arise from costs and benefits associated with agricultural externalities. The social costs that may be generated by modernagriculture, and the solutions used to restrict the same, were covered by this analysis. The literature on the subject and the Polish FADN databases were used. It was found thatfarms of environmentally friendly producers failed to collect enough payments to compensate for running a green business.