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 ?
Although this aggregate J-curve delivers an attractive internal rate of return to world commercial exports at the twenty year horizon, the return to the United States exclusively is negative throughout the period of our analysis due to significant (and heretofore unrecognized) positive externality effects of U.S.
Alternatively, we could discuss a rancher who stops his cattle from roaming as conferring on the farmer the positive externality of preserved crops.
An STS approach is based on positive externality theory; firms will increase their production of research on reduced emissions processes to the socially optimal level if they are compensated for the positive externality that results from their activity.
Fortunately, due to the presence of the public university, with it's support reflected in the respective founds and the resulting commitment that comes with them, if any company decides to undertake a project of the network, it creates a positive externality for all the other projects or companies involved, increasing the possibility to create the necessary critical mass.
189, 190, 195, 197 (2009) (discussing unjust enrichment in positive externality terms).
negative and positive externality cases, and the difference is fairly
Similarly, introducing a negative externality from crime creates a positive externality from avoidance effort that offsets the negative external effect on criminals.
Especially when the United States has become more committed to environmental issues such as the reduction of C[O.sub.2] emissions, if China can go along the same direction, it will bring positive externality to the world.
Development of positive externality: In the Chilean case, there was some knowledge exchange among the small circle of early pioneers and later the clustering of firms generated benefits of economies of scale.
A bee-keeper whose bees obtain nectar from apple blossoms is the recipient of a one-way positive externality. However, the bees reciprocate by fertilizing the blossoms for an apple grower.
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.

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