econ - externalities

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Negative Externality of Consumption

Negative effects suffered by a third party whose interests are not considered when a good or service is consumed, so the third party are therefore not compensated.

Negative externalities of production

Negative effects suffered by a third party whose interests are not considered when a good or service is produced, so the third party are therefore not compensated.

Market Failure

The failure of markets to achieve allocative efficiency. Markets fail to produce the output at which marginal social benefits are equal to marginal social costs; social or community surplus (consumer surplus + producer surplus) is not maximised.

Positive externalities of consumption

The beneficial effects that are enjoyed by third parties whose interests are not accounted for when a good or service is consumed, therefore they do not pay for the benefits they receive.

Positive Externalities of Production

The beneficial effects that are enjoyed by third parties whose interests are not accounted for when a good or service is produced, therefore they do not have to pay for the benefits they receive