A cost or benefit that isn't reflected in price.
What are Externalities?
John Spacey, updated on April 14, 2018
An externality is a cost or benefit that isn't reflected in the price paid for a good or service. For example, a manufactured product may not include the cost of generated air pollution to health and quality of life. In other words, the cost of the air pollution may be born by those who live near the shoe factory not those who buy the shoes. Air pollution is also known to have a negative impact globally, a cost that often isn't paid by those who create it. Externalities can also be benefits such as a bee keeper whose bees pollinate nearby crops free of charge.
EconomicsThis is the complete list of articles we have written about economics.
If you enjoyed this page, please consider bookmarking Simplicable.
A list of economic theories that are particularly useful for business.
The tendency for people at high risk to buy insurance.
A list of economic positions or capabilities that allow you to outperform in a particular industry.A definition of knowledge work with examples. A definition of production with examples.
An overview of post-scarcity.The common types of economic infrastructure.
The common types of business competition.The common types of inefficiency.
An overview of supply with common examples.
The difference between two common investment measurements.
An overview of Regression Toward The Mean.An overview of the Efficient Market Hypothesis.
An overview of animal spirits, a theory of investing.A definition of financial market with examples.
A definition of Mr. Market, an investing theory.
A definition of organic growth with examples.
The common types of concept company.A definition of information costs with examples.
The definition of channel check with examples.
TrendingThe most popular articles on Simplicable in the past day. Recent posts or updates on Simplicable. Site Map