In economics, an externality, or transaction spillover, is a cost or benefit that is not transmitted through pricesExternality vs Public Goods Hanming Fang, Duke University in that it is incurred by a party who was not involved as either a buyer or seller of the goods or services causing the cost or benefit. The cost of an externality is a negative externality, or external cost, while the benefit of an externality is a positive externality, or external benefit.
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