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 example of a …

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 bear the …

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 negative externality is …

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 activity.

positive externality, in economics, a benefit received or transferred to a party as an indirect effect of the transactions of another party. Positive externalities arise when one party, such as a business, makes …

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 also occur from …