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An externality is

An externality is
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An externality is the cost or benefit that borne by a party who did not choose to incur that cost or benefit. There are both positive and negative externalities. For example, if a factory cuases pollution in the air, the factory is not paying for it in any form to clean up the pollution, the cost is being borne by others who suffer from the pollution. This is a negative externality. On the other hand, take a lighthouse, ships dont pay the lighthouse for the benefit of light, however they are dependent on it and this is a positve externality.

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