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External Benefit
(redirected from Positive externality)

   Also found in: Dictionary/thesaurus, Wikipedia 0.01 sec.
External Benefit
The benefit 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. A transaction may have both external benefits and external costs: a transaction may result in a factory opening in one city and one closing in another. An external benefit is also called positive externality. See also: Externality.


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Janis Sarra, law professor and corporate governance expert for the Network for Sustainable Financial Systems, explains that before debt was packaged into derivatives, the banks created a so-called positive externality for investors: "corporate stakeholders," she writes, "could be confident that the bank was engaged in a measure of monitoring and oversight of the firm's solvency.
But there is also a second, positive externality generated by the geographical density of markets.
And others simply want to give an economic boost to the local farmers and other producers who furnish that great little positive externality called local green space.
 
 
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