externalities
Externalities refer to the unintended consequences or spillover effects of economic activities that impact third parties, who are not directly involved in the transaction. These external effects can be positive or negative and are not reflected in the market prices, leading to a market failure.
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Related Concepts (14)
- calculating the social cost of carbon
- cost-benefit analysis
- environmental pollution
- fallacy of composition in economics
- free rider problem
- market failure
- negative externalities
- positive externalities
- public goods
- public goods provision
- regulation and government intervention
- social welfare
- spillover effects
- tradable permits