Business Terms and Jargon Explained

What is Externality

An externality exists when the production or consumption of a good directly affects business or consumers not involved in buying and selling it and when those effects are not fully reflected in market prices.

Crown Copyright. Material taken from HM-Treasury. Reproduced under the terms and conditions of the Click-Use Licence.

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Term created / updated 2007-03-16 15:58:23

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