externality, externalities
In economic theory it is generally recognized that some of the costs and benefits of economic activities (production, exchange, and the like) are not reflected in market prices. So, for example, air pollution caused by the activity of a company may be experienced as a cost by local residents or by society as a whole, but since clean air does not figure in the costs of production as calculated by the company, the latter has no incentive to reduce its polluting activity. Such costs and benefits which are not expressed in market prices are termed ‘externalities’. Policy problems implicit in social and environmental externalities in market economies are conventionally addressed by economists in the form of strategies for assigning market values to non-market variables and so ‘internalizing’ them, for example through taxation of pollution or scarce-resource use. Recent developments in environmental economics tend to exhibit the limitations of the concept of externality in the face of the systemic character of environmental-economic interactions (see, for example, Economics, Natural-Resource Scarcity and Development, 1989).

Dictionary of sociology. 2013.

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  • Externality — Ex ter*nal i*ty, n. State of being external; exteriority; (Metaph.) separation from the perceiving mind. [1913 Webster] Pressure or resistance necessarily supposes externality in the thing which presses or resists. A. Smith. [1913 Webster] …   The Collaborative International Dictionary of English

  • externality — ex‧ter‧nal‧i‧ty [ˌekstɜːˈnælti ǁ ɜːr ] noun externalities PLURALFORM [countable usually plural] ECONOMICS something that is not directly connected to an industrial process or economic activity but has an effect on it: • Clean air rules are all… …   Financial and business terms

  • externality — 1713, from EXTERNAL (Cf. external) + ITY (Cf. ity) …   Etymology dictionary

  • externality — [eks΄tər nal′ə tē] n. 1. the quality or state of being external 2. pl. externalities an external thing …   English World dictionary

  • Externality — External redirects here. For other uses, see External (disambiguation). In economics, an externality (or transaction spillover) is a cost or benefit, not transmitted through prices,[1] incurred by a party who did not agree to the action causing… …   Wikipedia

  • Externality — A consequence of an economic activity that is experienced by unrelated third parties. An externality can be either positive or negative. Pollution emitted by a factory that spoils the surrounding environment and affects the health of nearby… …   Investment dictionary

  • externality — A cost or benefit to an economic agent that is not matched by a compensating financial flow. For example, siting a railway station close to a housing estate represents an externality to householders on that estate. It is an external economy if… …   Big dictionary of business and management

  • externality — noun (plural ties) Date: 1673 1. the quality or state of being external or externalized 2. something that is external 3. a secondary or unintended consequence < pollution and other externalities of manufacturing > …   New Collegiate Dictionary

  • externality — /ek steuhr nal i tee/, n., pl. externalities. 1. the state or quality of being external. 2. something external; an outward feature. 3. excessive attention to externals. 4. an external effect, often unforeseen or unintended, accompanying a process …   Universalium

  • externality — noun a) The state of being external or externalized. b) A thing that is external relative to something else …   Wiktionary

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