externalities
Costs others bear
Externalities are costs or benefits that affect parties not directly involved in a transaction.
A factory's pollution harms neighbors who didn't choose to buy its products—a negative externality.
A beekeeper's hives pollinate nearby farms for free—a positive externality.
The term is central to economics and policy debates about regulation, taxation, and market failure: Carbon taxes attempt to price in the externality of emissions.
Inefficient resource distribution
- inefficiencySuboptimal use of resources
- spilloverExcess that escapes
- overproductionExcessive manufacture beyond need
- underproductionInsufficient manufacturing output
Pigouvian tax · social cost · cost-benefit analysis · unintended consequences · transaction costs · property rights · compensation
Environmental harm from waste
- carbon emissionsReleased greenhouse gases
- greenhouse gasesEmissions that trap heat
- deforestationLarge-scale woodland elimination
- biodiversity lossReduction in species variety
water contamination · air quality · noise pollution · secondhand smoke · acid rain · oil spills · ozone depletion · overfishing
Official rules governing conduct
- carbon taxLevy on fuel combustion
- cap-and-tradeMarket-based pollution control
- emissions standardsLegal limits on pollutants released
- subsidiesFinancial aid from government
permits · zoning · environmental protection · government intervention · public policy · mandates · abatement · enforcement
Excessive accumulation causing blockage
- trafficMovement along routes
- urban sprawlUncontrolled peripheral development
- public healthCommunity-level disease prevention
- community impactEffect on local residents
gentrification · blight · herd immunity · network effects · agglomeration · social contagion
market failure
Inefficient resource distribution
- inefficiencySuboptimal use of resources
- spilloverExcess that escapes
- overproductionExcessive manufacture beyond need
underproduction · Pigouvian tax · social cost · cost-benefit analysis · unintended consequences · transaction costs · property rights · compensation
pollution
Environmental harm from waste
- carbon emissionsReleased greenhouse gases
- greenhouse gasesEmissions that trap heat
- deforestationLarge-scale woodland elimination
biodiversity loss · water contamination · air quality · noise pollution · secondhand smoke · acid rain · oil spills · ozone depletion · overfishing · habitat destruction
regulation
Official rules governing conduct
- carbon taxLevy on fuel combustion
- cap-and-tradeMarket-based pollution control
- emissions standardsLegal limits on pollutants released
subsidies · permits · zoning · environmental protection · government intervention · public policy · mandates · abatement · enforcement
congestion
Excessive accumulation causing blockage
- trafficMovement along routes
- urban sprawlUncontrolled peripheral development
- public healthCommunity-level disease prevention
community impact · gentrification · blight · herd immunity · network effects · agglomeration · social contagion
- economicssupply and demand, inflation, GDP, GNP, gross domestic product
- market economicsmonopoly, oligopoly, perfect competition, duopoly, monopsony
- microeconomicsdemand, supply, supply and demand, price, market
- economic problemsmarket failure, recession, inflation, deflation, stagflation
- Indirect Effectssecondhand smoke, passive smoking, collateral damage, ripple effect, spillover
- green economicsgreen economy, carbon tax, emissions trading, cap and trade, carbon credits
external, externally, externalize, extern, externalized, externalization, externality, externalizes, externals