Suppose you purchase gasoline for your car. When you drive, you generate air pollution of several different types, thus you generate negative externalities (costs) for those who have to breathe the pollution, who had no input into how much gasoline you bought or into your decision to drive.
Suppose you decide to plant some trees in your yard. They help
beautify your neighborhood and perhaps slightly increase property
values for your neighbors. In this way you generate a positive
externality (benefit) for your neighbors.
Copyright © 1995-2004 OnLineTexts.com, Inc. - All Rights Reserved