Home > Term: positive externality
positive externality
A beneficial externality; that is, a beneficial effect of one economic agent's actions on another. Considered a distortion because the first agent has inadequate incentive to act. Examples are the attractiveness of well-kept farms for the tourism industry (a production externality) and reduced contagion of disease due to vaccines (a consumption externality).
- Part of Speech: noun
- Industry/Domain: Economy
- Category: International economics
- Company: University of Michigan
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Creator
- Noroc
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