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externality (example sentences (Pollution is a negative externality that…
externality
example sentences
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Externalities exist where actors do not take full account of the consequences of their actions on other actors in society.
When the impact of the bystander is adverse, the externality is called negative externality.
When the impact of the bystander is beneficial, the externality is called a positive externality.
Negative externalities cause the socially optimal quantity in the market to be less than the equilibrium quantity.
Positive externalities cause the socially optimal quantity in the market to be greater than the equilibrium quantity.
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definition
A consequence of an industrial or commercial activity which affects other people or things without this being reflected in market prices.
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origin
1670s, "state of being external," from external + -ity. From 1839 as "that which is external." From 1833 as "undue regard for externals."