the situation in which the costs of producing or the benefits of consuming a good spill over onto those who are not producing or consuming the good.

Side effects of an action that influence the well-being of nonconsenting parties. The nonconsenting parties may be either helped (by external benefits) or harmed (by external costs). For example, the effect of an industry’s output on the total costs of each firm and/or other participants in the economy.

a phenomenon that arises when an individual or firm takes an action but does not bear all the costs (negative externality) or receive all the benefits (positive externality)

when an individual, firm, country, or other entity takes an action but does not bear all its costs (negative externalities) or receive all its benefits (positive externalities).

a benefit delivered to someone else or a cost imposed upon someone else when it isn't feasible to charge the recipient for the benefit or charge the imposed cost back to the imposer

a benefit or cost falling on a party outside a given activity

a CONSEQUENCE not considered in analysis

a cost borne by a third party who is not directly involved in the transaction at hand (in the above example, the manufacturer's sale of the product to the retailer)

a cost imposed upon one person by another person's action without the first person's consent

a cost not reflected in the market price of a good

a cost or a benefit that affects bystanders

a cost or benefit accruing to a person or group of people who are external to a market transaction

a cost or benefit imposed on people other than the consumers and producers of a good or service

a cost or benefit of some action or process that is not accounted for monitarily

a cost that is not borne by the primary buyer or seller in an interaction

an effect of a decision not borne by the decision-maker

an effect on costs or benefits that is not accounted for by market mechanisms such as price

an effect that is external to the market, that is, somebody profits or is hurt, but nobody pays/is paid for it (economically, that is)

an unintended or collateral cost (or benefit) to society as a whole that result from an action

a secondary or unintended consequence of an action, usually imposing costs on people who never consented to them

a situation where the market allows the producer and consumer to push costs involved in production or consumption onto the society at large

a value addition or a value destruction emanating from the production or consumption of the product that the producers cannot really recover or allow for in the price of the product produced

(Hackett, 1998, chapter 4). Positive externalities are unpaid-for benefits enjoyed by others in society as a consequence of a buyer/seller transaction. For example, when parents pay to vaccinate their children against infectious disease, they create an external benefit -- the reduced likelihood of epidemic -- that is shared by many in society. Negative externalities are uncompensated costs borne by others in society as a consequence of a buyer/seller transaction. For example, when firms can avoid costly cleanup by polluting, they create an external cost -- the harms created by their pollution -- that is shared by many in society.

A type of market failure that occurs when an economic transaction generates a cost that is not paid by the buyer or seller, but by someone outside the transaction, or society as a whole. Examples include pollution and traffic congestion. There are also positive externalities, such as a technological advance discovered by one business, which other business can then use.

A cost or a benefit that arises from production that falls on someone other than the producer; or a cost or benefit that arises from consumption that falls on someone other than the consumer. (p. 182)

A cost or benefit experienced by one economic agent that results from the actions of another agent or agents.

The uncompensated, unintended side-effects of one party's actions on another party.

The unintended real (generally non-monetary) side effect of one party's actions on another party.

An outside force, such as a social and/or environmental benefit or cost, not included in the market price of the goods and services being produced; i.e. costs not borne by those who occasion them, and benefits not paid for by the recipients. Some economists suggest that externalities should be internalized, if they are known to have a significant effect on the demand or cost structure of a product, that is, corrections should be made, to allow for externalities when calculating marginal cost. Marginal cost thus becomes a social opportunity cost, or true cost.

An incidental condition that may affect a course of action: “Our economic system treats environmental degradation as an externality: a cost that does not enter into the conventional arithmetic that determines how we use our resources” (Barry Commoner).

When the cost or benefit of an activity is not captured in the pricing mechanism of the market.

In economics, a cost or benefit attributable to an economic activity that is not reflected in the price of the goods or services being produced. Thus damage to the environment may not be counted as a cost (or environmental protection as a benefit) in production. It is the aim of the POLLUTER PAYS PRINCIPLE to require polluters to meet the cost of avoiding pollution or of remedying its effects, so internalizing the externalities.

impacts means adverse and unintended effects imposed upon others.

The environmental, social, and economic impacts of producing a good or service that are not directly reflected in the market price of the good or service.

A cost or benefit not accounted for in the price of goods or services. Often "externality" refers to the cost of pollution and other environmental impacts.

Effects of an economic activity not included in the project statement from the point of view of the main project participants, and therefore not included in the financial costs and revenues that accrue to them. Externalities represent part of the difference between private costs and benefits, and social costs and benefits. Externalities should be quantified and valued, and included in the project statement for economic analysis.

An externality is a cost (or benefit) that results from some action but is not paid (or enjoyed) by the one doing the action. Externalities can be either positive or negative.

A side-effect on others following from the actions of an individual or group. This effect is not bought by those affected and may be unwished for. Thus, while the acquisition of a car may benefit one household by improving mobility, it generates pollution and creates congestion for others (A Dictionary of Geography,Oxford University Press)

third-party effect; a consequence of an economic activity which affects other parties without this being reflected in market prices

cost or a benefit that arises from an economic transaction which falls on people who do not participate in the transaction. This situation occurs because the externality is not included in the supply price or the demand price and is therefore not accounted for in the transaction price. Externality is one type of market failure that causes inefficiency. Back to the top

The costs or benefits of a firm's activities borne or received by others.

In economics, an externality is a cost or benefit from an economic transaction that parties "external" to the transaction receive. Externalities can be either positive, when an external benefit is generated, or negative, when an external cost is imposed upon others.