The concept of externality was first developed by Alfred Marshall in the 1890s [1] and achieved broader attention in the works of economist Arthur Pigou in the 1920s. [2] The prototypical …

Aug 10, 2025 · What Is an Externality? An externality occurs when an activity by one party causes a cost or benefit to another party. These effects can be either negative or positive.

Uncertainty problems are far reaching. In fact, the well-known moral hazard is a form of externality in which decision makers maximize their ben-efits while inflicting damage on others but do not …

4 days ago · What Is an Externality? An externality is a cost or benefit that is caused by one party but financially incurred or received by another. Externalities can be negative or positive. A …

An externality, in economic terms, is a side effect or consequence of an activity that is not reflected in the cost of that activity, and not primarily borne by those directly involved in said …

The meaning of EXTERNALITY is the quality or state of being external or externalized. How to use externality in a sentence.

Such unaccounted-for consequences are called externalities. Because externalities are not accounted for in the costs and prices of the free market, market agents will receive the wrong …

Externalities occur when producing or consuming a good cause an impact on third parties not directly related to the transaction. Externalities can either be positive or negative. They can …

Externalities are positive or negative indirect outcomes caused by production or consumption activities. Every day, millions of production and consumption activities are taking place. The …

The effect of a market exchange on a third party who is outside or “external” to the exchange is called an externality. Because externalities that occur in market transactions affect other …