Externality

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Related to Negative externalities: Positive externalities

Externality

The cost or benefits of a transaction to parties who do not directly participate in it. Externality can be either positive or negative. For example, a merger can lead to higher share prices and bonuses for employees, benefiting shareholders and employees at the two companies merging, This can create wealth and positively impact a community. On the other hand, the merger can drive a competitor out of business, which results in layoffs and reduced wealth, which can hurt a community. Externality is also called spillover or the neighborhood effect. See also: External benefit, External cost.
References in periodicals archive ?
We can easily define negative externalities as costs an actor imposes on third parties.
19) Furthermore, Pigouvian taxes are meant to align the private and social costs of activities that produce negative externalities and not to generate revenue for the public sector to be spent in particular ways.
When a large portion of economic activity is in the form of exports, the home state is able to capture the economic rents from foreign visitors, while exporting many of the negative externalities when the visitors return home.
Yet, the decision to raise public funds to finance a project creates negative externalities due to the economic harm of taxation.
Negative externalities including disinformation, false rumors, false science, libel, immorality, indecency, incitement to crime, sedition, etc.
According to those who explain contract law from an economic or efficiency perspective, the goal of limiting negative externalities is behind several features of contract law, (204) from the refusal to enforce certain contracts on the basis of illegality or public policy to the limitation of contractual freedom through mandatory default rules.
of negative externalities, innovators and patent owners may engage in
If there are negative externalities, she produces too much; if
The amendment will protect religious practice, but its negative externalities may severely curtail others' enjoyment of their own constitutional rights.
If a project has negative externalities, for example population displacement, the assessment looks at the number of persons or businesses affected and whether compensation packages are in line with international best practice.