Aug 10, 2025 · What Is an Externality? An externality occurs when an activity by one party causes a cost or benefit to another party. These effects can be either negative or positive.

The concept of externality was first developed by Alfred Marshall in the 1890s [1] and achieved broader attention in the works of economist Arthur Pigou in the 1920s. [2] The prototypical …

Externalities occur when producing or consuming a good cause an impact on third parties not directly related to the transaction. Externalities can either be positive or negative. They can …

What is an Externality? An externality is a cost or benefit of an economic activity experienced by an unrelated third party. The external cost or benefit is not reflected in the final cost or benefit …

Consumption, production, and investment decisions of individuals, households, and firms often affect people not directly involved in the transactions. Sometimes these indirect effects are …

5 days ago · What Is an Externality? 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 …

An externality, in economic terms, is a side effect or consequence of an activity that is not reflected in the cost of that activity, and not primarily borne by those directly involved in said …

Externalities, which can be either positive or negative to the affected parties, are a form of market failure resulting in inefficient market outcomes. Negative externalities are an important concept …

Corrective taxes or Pigouvian taxes: A tax designed to induce agents who produce negative externalities to reduce quantity toward the socially optimal level. Externality: An externality …

Externalities refer to the cost or benefit experienced by an entity without producing, consuming, or paying for it. It implies that this indirect cost or benefit affects an entity other than its producer …