externality
Also known as externalities
thumb|Air pollution from [[motor vehicles is an example of a negative externality. The costs of the air pollution for the rest of society is not compensated for by either the producers or users of motorized transport.]]
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Article
32 sectionsContents
- History of the concept
- Definitions
- Implications
- Examples
- Negative
- Negative production externalities
- Negative consumption externalities
- Negative externalities outside production and consumption
- Positive
- Positive production externalities
- Positive consumption externalities
- Positional
- Pecuniary
- Inframarginal
- Technological
- Supply and demand diagram
- External costs
- External benefits
- Causes
- Possible solutions
- Solutions in non-market economies
- Solutions in market economies
- Solutions to greenhouse gas emission externalities
- Emissions fee
- Cap-and-trade systems
- Command-and-control regulations
- Scientific calculation of external costs
- Criticism
- See also
- References
- Further reading
- External links
thumb|Air pollution from [[motor vehicles is an example of a negative externality. The costs of the air pollution for the rest of society is not compensated for by either the producers or users of motorized transport.]]
In economics, an externality is a cost or benefit to an uninvolved third party that arises as an effect of another party's (or parties') activity. Many externalities can be considered as unpriced components that are involved in either consumer or producer consumption. Air pollution from motor vehicles is one example. The cost of air pollution to society is not paid by either the producers or users of motorized transport. Water pollution from mills and factories are another example. All (water) consumers are made worse off by pollution but are not compensated by the market for this damage.