Externality

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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 reasons for private law's reluctance to require beneficiaries to contribute to the internalization of positive externalities lie in considerations of autonomy and preference for pre-activity agreements, especially if the activity is sufficiently profitable for its doer, so that the "free riding" by the beneficiary will not undermine the activity altogether.
Using a sample of Compustat firms for the period of 1975-2012, I document evidence for positive externalities of R&D investments.
The production tax credit is properly understood as a Pigouvian subsidy to correct positive externalities.
We find loss aversion at work in policymaking as well: negative externalities, we suggest, are often viewed as a call to action, while positive externalities are viewed merely as an occasion for celebration.
We then gauge whether it is indeed those local governments that face the largest positive externalities which undertake the most aggressive development policies.
Given the nature of the public and in accordance with the economic approaches described by Jaffe (1996), the research and development externalities can be taken as an example of positive externality, in fact, the concept of positive externalities is very closely related to the concept of "public good".
ACI says at the meeting there was strong consensus from all airports, local and regional authorities and MEPs: "on the absolute need for the proposed guidelines to be amended to better reflect and support airports' positive externalities and in particular their contribution to the economy and jobs.
Depending on their capacity to adapt, during the expansion or boom of the global economy, developing countries such as Turkey try to assimilate and internalize positive externalities of this environment in order to attain a sustainable development path by mobilizing domestic resources such as human capital, savings, organizational capability and so forth.
But realising these positive externalities does require that AFSs are actually used.
Government policymakers should weigh the negative externalities, such as those caused by traffic congestion, against the positive externalities, such as those associated with enhanced urban access.
In fact, besides reducing terrorism, I can see more value in the countless other positive externalities.

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