EXTERNALITIES

Externalities

Externalities are a very common factor in virtually almost all the areas involving economical activities. Externalities are defined as the third party effects that rise for the consumption and production of the goods and services, for which no appropriate compensation has been made. These externalities can become the reason of failure in a market if the mechanism of the price is not taken in to account along with accountancy of full social benefits and social costs of the produced and consumed goods and services. The study of externalities has become very extensive since the past few years, because of the concerns ...