externality.

a cost or benefit of an activity affecting others that is not fully reflected in the decision-maker's private costs or returns

Use it for

Words that belong together

• negative externality
• positive externality
• address an externality

On the page

Air pollution is a negative externality of the production process.

Education can generate positive externalities beyond the student.

The policy aims to account for an externality in the private price.

Usage notes

Primary curation section: Academic. Can be negative or positive. Not every indirect consequence is an economic externality. Plural: externalities.