externality

English

Etymology

From external +‎ -ity. In the economic sense coined by British economist Alfred Marshall in 1890.

Pronunciation

Noun

externality (countable and uncountable, plural externalities)

  1. (uncountable) The state of being external or externalized.
    • 1916, Ralph Barton Perry, Present philosophical tendencies‎[1], page 319:
      But according to the theory of the externality of relations, terms acquire from their new relations an added character, which does not either condition, or necessarily alter, the character which they already possess.
  2. (countable) A thing that is external relative to something else.
  3. (economics, countable) An impact, positive or negative, on any party not involved in a given economic transaction or act.
    Waste is a negative externality arising from consumption.
    • 2007, George W. Bush, Executive Order 13422:
      "(1) Each agency shall identify in writing the specific market failure (such as externalities, market power, lack of information) or other specific problem that it intends to address (including, where applicable, the failures of public institutions) that warrant new agency action, as well as assess the significance of that problem, to enable assessment of whether any new regulation is warranted."
    • 2016, Cinnamon P. Carlarne, Kevin R. Gray, Richard Tarasofsky, editors, The Oxford Handbook of International Climate Change Law‎[2], Oxford University Press, →ISBN:
      Pigouvian taxes are meant to internalize ‘externalities’, generally understood to be positive or negative side-effects from economic production that are not reflected in the price of production.

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