Negative externality

 

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Negative externality

A harmful externality; that is, a harmful effect of one economic agent's actions on another. Considered a distortion because the first agent has inadequate incentive to curtail their action. Examples are pollution from factories (a production externality) and smoke from cigarettes (a consumption externality).



Similar Matches

Harmful externality

Harmful externality

Negative externality.


Consumption externality

Consumption externality

An externality arising from consumption.


Positive externality

Positive externality

A beneficial externality; that is, a beneficial effect of one economic agent's actions on another. Considered a distortion because the first agent has inadequate incentive to act. Examples are the attractiveness of well-kept farms for the tourism industry (a production externality) and reduced contagion of disease due to vaccines (a consumption externality).


Production externality

Production externality

An externality arising from production.


Externality

Externality

An effect of one economic agent's actions on another, such that one agent's decisions make another better or worse off by changing their utility or cost. Beneficial effects are positive externalities; harmful ones are negative externalities.




 
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