Externality

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Related to Positive externality: Negative externality

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 ?
The cost reduction of the firms due to spillovers will then create new demand and translate in larger market shares, thus providing a positive externality effect for the industry.
Alternatively, we could discuss a rancher who stops his cattle from roaming as conferring on the farmer the positive externality of preserved crops.
Taking all above positive externality effects together, what is the total effect of urban agglomeration on incomes?
What differs in the positive externality case, again, is that
Thus one can presume that this unintended exercise stems from positive externality of congestion and may benefit health.
Note that this effect could be reversed if there is a positive externality from avoidance effort--if, for example, avoidance effort by one potential victim also benefits other potential victims.
If the passive seepage is unpriced, the pumper is the recipient of a one-way positive externality.
The R&D costs can be shared by the signatories to an agreement, since they are cooperating, and that yields an additional positive externality between members of the coalition.
For honeybees, flowers located within flying distance of the hive constitute a positive externality.
The nice smell of your neighbor's barbecue is an example of a positive externality, and your insomnia when he buys new sub-woofers would be a negative one.
A positive externality exists when some of the benefits accrue to those other than the purchaser.

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