Externality
Defined in 2 lectures. Each definition is in that lecture's terms.
Definitions are written by AI from each lecture’s transcript. The time opens the lecture where the lecturer explains it.
- A situation where one party's actions affect another party, creating a divergence between private and social costs or benefits.
- An externality arises whenever the actions of one party impact another party and the first party does not bear the consequence of doing so.