Search results
In economics, an externality or external cost is an indirect cost or benefit to an uninvolved third party that arises as an effect of another party's (or parties') activity. Externalities can be considered as unpriced components that are involved in either consumer or producer market transactions.
Jan 24, 2024 · An externality is a cost or benefit that is caused by one party but financially incurred or received by another. Externalities can be negative or positive. A negative externality is the...
- Will Kenton
- 2 min
In economics, some decisions affect third parties. These parties can be affected by the decision positively or negatively, but this influence is involuntary. This is known as an externality, or an external effect. The problem with externalities is that no one pays for the cost of these effects. Usually, they are not part of the decision process.
A pecuniary externality occurs when the actions of an economic agent cause an increase or decrease in market prices. For example, an influx of city-dwellers buying second homes in a rural area can drive up house prices, making it difficult for young people in the area to buy a house.
Definition and explanation. Externalities are side effects of an action that don't affect the doer of that action, but instead affect bystanders. Positive externalities are good outcomes for others; negative externalities are bad outcomes.
Mar 14, 2024 · An externality is a positive or negative spill-over affect on a third party after an economic transaction has taken place between two involved parties. Externalities occur when there are external costs or benefits which spill-over from an economic activity into the general public.
a positive or negative effect for someone else as a result of something that you do: Economists sometimes underestimate the actual cost of doing business because they don't include externalities like environmental damage from pollution. Transport creates some positive externalities because it stimulates economic growth and creates jobs.