However, the externality also increases the aggregate cost to the economy and society making it a negative externality. Externalities are negative when the social costs outweigh the private costs.

If the negative externality were taken into account, then the cost of the widget would be higher. This would result in decreased production and a more efficient price equilibrium.

Often, the people affected by a particular externality can't organize well enough to bargain collectively. Sometimes, it takes just one holdout to prevent anything constructive from happening.

Uncertainty problems are far reaching. In fact, the well-known moral hazard is a form of externality in which decision makers maximize their benefits while inflicting damage on others but do not bear ...

If obesity is considered a traditional disease then the contagious effect represents a clear negative externality. Others can only be made worse off if your illness increases the chances of their ...

Treating gun violence as an externality assumes that weapons markets are legitimate and that we must live with the consequences. In the coming weeks, I’ll use whatever power this office holds to ...

Automobile accidents can injure people and damage property, so drivers are required to carry sufficient insurance to cover the costs. The economic concept of an externality is at work here.

In the case of pollution—the traditional example of a negative externality—a polluter makes decisions based only on the direct cost of and profit opportunity from production and does not consider the ...