Negative Externalities

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  • A negative cost that is external to a transaction and where the bearer of the cost has no direct control over the transaction. The classic example of negative externality is the acid rain that results from the pollution caused by a factory. All the related long-term effects associated with the pollution are exogenous to the economic activities that resulted in the pollution in the first place.

    10.4135/9781412972024.n1694

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