Overview
Externalities are significant concepts in economics that describe the unintended consequences of economic activities on third parties. They can be either positive, such as the benefits of education, or negative, like the pollution caused by factories. Understanding externalities is crucial for addre...
Key Terms
Example: Pollution from a factory affects nearby residents.
Example: Education increases societal knowledge.
Example: Air pollution from cars affects public health.
Example: The social cost of pollution includes health care costs.
Example: When negative externalities lead to overproduction.
Example: Subsidies for renewable energy projects.
Related Topics
Public Goods
Explore goods that are available to all and how they relate to externalities.
intermediateMarket Structures
Understand how different market structures can influence the presence of externalities.
intermediateCost-Benefit Analysis
Learn how to evaluate the economic efficiency of projects considering externalities.
advancedKey Concepts
positive externalitiesnegative externalitiessocial costmarket failure