externality
Third-party market effect
An externality is a cost or benefit that affects parties not directly involved in a transaction.
A factory's pollution imposes costs on neighbors who didn't choose to bear them—a negative externality.
A neighbor's well-kept garden raises nearby property values—a positive externality.
The term is central to economics and policy debates about when markets fail to account for true costs: Carbon taxes attempt to internalize the externality of emissions.
Required payment amount
- harmInjury or damage
- damageHarm or impairment
- burdenOppressive weight or duty
- nuisanceCause of aggravation
degradation · detriment · diseconomy · noise
Suboptimal use of resources
- allocationDistribution of shares
- regulationOfficial rules governing conduct
- subsidyFinancial assistance from government
- internalizationAbsorbing ideas as one's own
Environmental harm from waste
- emissionsSubstances released into air
- deforestationLarge-scale woodland elimination
- contaminationIntroduction of impurities
- runoffExcess water drainage
Secondary outcome of production
- contagionDisease spread by contact
- diffusionPassive molecular spreading
- leakageUnintended fluid escape
- cross-borderSpanning national boundaries
transboundary · overspill · neighboring · adjacent · upstream · downstream
Advantage or gain
- educationSystematic development of mind
- vaccinationAdministered immunity booster
- beautificationAct of enhancing appearance
- pollinationFlower reproductive transfer
Excessive accumulation causing blockage
- vaccinationAdministered immunity booster
- crimePunishable illegal act
- gentrificationWealthy influx displacing locals
- nuisanceCause of aggravation
cost
Required payment amount
nuisance · degradation · detriment · diseconomy · noise
inefficiency
Suboptimal use of resources
- allocationDistribution of shares
- regulationOfficial rules governing conduct
- subsidyFinancial assistance from government
pollution
Environmental harm from waste
- emissionsSubstances released into air
- deforestationLarge-scale woodland elimination
- contaminationIntroduction of impurities
byproduct
Secondary outcome of production
- contagionDisease spread by contact
- diffusionPassive molecular spreading
- leakageUnintended fluid escape
cross-border · transboundary · overspill · neighboring · adjacent · upstream · downstream
benefit
Advantage or gain
- educationSystematic development of mind
- vaccinationAdministered immunity booster
- beautificationAct of enhancing appearance
congestion
Excessive accumulation causing blockage
- vaccinationAdministered immunity booster
- crimePunishable illegal act
- gentrificationWealthy influx displacing locals
- market economicsmonopoly, oligopoly, perfect competition, duopoly, monopsony
- microeconomicsdemand, supply, supply and demand, price, market
- game theoryzero-sum game, prisoners dilemma, minimax, payoff, equilibrium
- accidentsaccident, car accident, bike accident, mishap, traffic accident
- implicationsimplication, implied meaning, inference, connotation, innuendo
externalize, externalized, externalization, externalizes, externalizing, externalities