externality Definition
a side effect or consequence of an industrial or commercial activity that affects other parties without this being reflected in the cost of the goods or services involved, such as the pollination of surrounding crops by bees kept for honey.
Using externality: Examples
Take a moment to familiarize yourself with how "externality" can be used in various situations through the following examples!
Example
The pollution caused by the factory is an externality that affects the health of the nearby residents.
Example
The use of pesticides in farming has negative externalities on the environment.
Example
The benefits of education have positive externalities on society as a whole.
externality Synonyms and Antonyms
Synonyms for externality
- consequence
- impact
- effect
- ramification
- side effect
Phrases with externality
a benefit that is enjoyed by a third-party as a result of an economic transaction, without compensation to the third-party
Example
An example of a positive externality is the education of a person, which benefits not only the individual but also the society as a whole.
a cost that is suffered by a third-party as a result of an economic transaction, without compensation to the third-party
Example
An example of a negative externality is pollution caused by a factory, which affects the health of nearby residents without compensation.
an externality that arises from the production of goods and services
Example
An example of a production externality is the pollution caused by a factory during the production process.
Summary: externality in Brief
The term 'externality' [ɪkˌstɜːnˈæləti] refers to the side effects or consequences of an industrial or commercial activity that affect other parties without being reflected in the cost of goods or services involved. It can be positive or negative, with examples like the pollination of surrounding crops by bees kept for honey, or the pollution caused by a factory. 'Externality' extends into phrases like 'positive externality,' and 'negative externality,' denoting benefits and costs respectively.
