In economics, what is the term for a cost or benefit that affects a third party who did not choose to incur that cost or benefit?
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Externality
Externalities can be positive or negative. Pollution is a classic negative externality, where the cost of production is forced upon society rather than the producer.
Also asked as:
- What economic term refers to a consequence of an activity that affects other parties without this being reflected in the cost of the goods or services involved?