Consider the following extract from an article that appeared in The Sunday Times (Perth) on 6 September 2015 (‘Robots to take up jobs’, by Annabel Hennessy)

Perth should prepare for a robot job takeover with automated technology and artificial intelligence entering all major industries and creating a ‘ramped-up information revolution’, a leading scientist says.

Dr Stefan Hajkowicz, a principal CSIRO scientist, said automated businesses were no longer ‘science fiction’ but a reality that would soon be causing major job loss in Perth and other Australian capitals . ‘We shouldn’t be afraid of it, but let’s not underestimate the size of the transition here. The number of people who are in jobs that are likely to be replaced by robotics is high. Initially we may struggle. Long term, the industrial revolution created net jobs growth not destruction. It got rid [of] a lot of the unpleasant jobs. The information revolution we’re moving into will do the same.’ Repetitive, manual jobs in retail, accounting and legal offices will be replaced by more efficient robotics, he said.

REQUIRED

a. Will the move to replace employees with robotics create any externalities? If so, what might be the nature of these externalities?

b. How, if at all, would these externalities impact the reported profits or losses of those organizations that replaced employees with robotics?