Learn how externalities impact economics, with examples of positive and negative outcomes, and explore solutions like taxes, subsidies, and regulations.

Wine growers everywhere fear spring frosts. New vine buds emerge in the spring and are highly susceptible to freezing temperatures which can kill them and result in significant crop loss for the year.

An externality is a cost or benefit related to the production or consumption of a good or service that affects third parties unrelated to the production or consumption. It is generally the unintended, ...

Consumption, production, and investment decisions of individuals, households, and firms often affect people not directly involved in the transactions. Sometimes these indirect effects are tiny. But ...

Ling, Xi, Wesley R. Hartmann, and Tomomichi Amano. "Preference Externality Estimators: A Comparison of Border Approaches and IVs." Management Science 70, no. 11 (November 2024): 7892–7910.

Al Gore and David Blood’s op-ed “ESG Investing Is Consistent with Fiduciary Duty” (Nov. 9) includes two examples that highlight the best way to handle externalities, the economic term for costs ...