Positive externality | Definition, Examples, Internalizing . . . Positive externality, in economics, a benefit received or transferred to a party as an indirect effect of the transactions of another party Positive externalities arise when one party, such as a business, makes another party better off but does not receive any compensation for doing so
Positive Externalities - Economics Help Definition of Positive Externality: This occurs when the consumption or production of a good causes a benefit to a third party For example: When you consume education you get a private benefit But there are also benefits to the rest of society
15 Positive Externality Examples You Should Know Positive Externality (External Benefit): Others, who weren’t involved, also get a benefit for free Because the person taking the action doesn’t receive all the benefits (some spill over to others), they might not do as much of the activity as would be ideal for society
Positive Externalities Explained - Intelligent Economist Externalities are otherwise known as “spill-over effects ” Positive externalities are the benefits experienced by these third parties as a result of consumption or production; in contrast, negative externalities are the harms to those third parties
10 Positive Externality Examples (2025) - Helpful Professor There are two main types of externalities: positive and negative For example, water pollution affects all consumers but is not caused by them Water pollution is, therefore, a negative externality A positive externality, on the other hand, benefits the third party
Negative Externalities vs. Positive Externalities - Whats the . . . On the other hand, positive externalities are the benefits that accrue to third parties from the production or consumption of a good, such as education or vaccination These external benefits enhance societal welfare and can result in market underproduction
5. 1 Externalities – Principles of Microeconomics In the presence of a positive externality (with a constant marginal external benefit), this curve lies above the demand curve at all quantities When we add external costs to private costs, we create a marginal social cost curve