Externalities
An externality is a cost or benefit to a third party who is not involved in the action that caused this cost or benefit. Costs are called negative externalities. Benefits are called positive externalities.
Negative Externalities
The following list shows some examples of negative externalities:
- Air pollution
- Antibiotic resistance
- Spam (e-mail or transaction spam in Blockchains)
- Traffic congestion
- Nuclear waste
- Noise pollution
One can distinguish between production-induced positive externalities or consumption-based positive externalities. This means that either the production quantity or the consumption quantity is lower than the socially optimal quantity.
Positive Externalities
The following list shows some examples of positive externalities:
- Education
- Research
- Maintaining a garden
- Vaccination
- Provision of a blockchain full node
- Open Source software
One can distinguish between production-induced positive externalities or consumption-based positive externalities. This means that the production or consumption quantity is lower than the socially optimal quantity.
