Editing Externality (section)

===Negative===
[[File:Empire State Building Night.jpg|thumb|[[Light pollution]] is an example of an externality because the consumption of street lighting has an effect on bystanders that is not compensated for by the consumers of the lighting.]]

A '''negative externality''' (also called "external cost" or "external diseconomy") is an economic activity that imposes a negative effect on an unrelated third party, not captured by the market price. It can arise either during the production or the consumption of a good or service.<ref name="externality">{{cite web |title=Microeconomics – Externalities |url=http://principles-of-economics-and-business.blogspot.com/2014/10/microeconomics-externalities.html |access-date=2014-11-23}}</ref>{{better source needed|reason=[[WP:BLOGS]]|date=July 2022}} Pollution is termed an externality because it imposes costs on people who are "external" to the producer and consumer of the polluting product.<ref>{{Cite book |title=Economics and the Environment |last=Goodstein|first=Eban |publisher=Wiley |isbn=9781118539729 |page=32 |date=2014-01-21}}</ref> [[Barry Commoner]] commented on the costs of externalities:
<blockquote>Clearly, we have compiled a record of serious failures in recent technological encounters with the environment. In each case, the new technology was brought into use before the ultimate hazards were known. We have been quick to reap the benefits and slow to comprehend the costs.<ref>Barry Commoner "Frail Reeds in a Harsh World". New York: The American Museum of Natural History. ''Natural History''. Journal of the American Museum of Natural History'', Vol. LXXVIII No. 2, February, 1969, p. 44</ref></blockquote>
Many negative externalities are related to the environmental consequences of production and use.  The article on [[environmental economics]] also addresses externalities and how they may be addressed in the context of environmental issues.

{{blockquote|"The corporation is an externalizing machine (moving its operating costs and risks to external organizations and people), in the same way that a shark is a killing machine." - [[Robert A. G. Monks|Robert Monks]] (2003) Republican candidate for Senate from Maine and corporate governance adviser in the film "[[The Corporation (2003 film)|The Corporation]]".}}

==== Negative production externalities ====
[[File:Usine UNION CARBIDE SOUTH CHARLESTON KANAWHA RIVER. from NARA 551180.jpg|thumb|right|200px|Effluent flows from industrial plants can pollute waterways. ]]
[[File:Externalities of cars and automobility and their connections with harms to people and the environment.jpg|thumb|Diagram of the [[Societal effects of cars#Public or external costs|externalities of cars and automobility]] and their negative impacts<ref>{{cite journal |last1=Miner |first1=Patrick |last2=Smith |first2=Barbara M. |last3=Jani |first3=Anant |last4=McNeill |first4=Geraldine |last5=Gathorne-Hardy |first5=Alfred |title=Car harm: A global review of automobility's harm to people and the environment |journal=Journal of Transport Geography |date=1 February 2024 |volume=115 |pages=103817 |doi=10.1016/j.jtrangeo.2024.103817 |issn=0966-6923}}</ref>]]
Examples for '''negative production externalities''' include:
* [[Air pollution]] from burning [[fossil fuels]]. This activity causes damages to crops, materials and (historic) buildings and public health.<ref>{{cite journal |title=Externalities of Energy Methodology 2005 Update Other impacts: ecosystems and biodiversity |vauthors=Torfs R, Int Panis L, De Nocker L, Vermoote S | journal= EUR 21951 EN – Extern E |year = 2004 |pages = 229–37 |editor= Peter Bickel |editor2=Rainer Friedrich |publisher=European Commission Publications Office, Luxembourg}}</ref><ref>{{cite book |title=Externalities of Energy Methodology 2005 Update |chapter=Impact pathway Approach Exposure – Response functions |vauthors=Rabl A, Hurley F, Torfs R, Int Panis L, De Nocker L, Vermoote S, Bickel P, Friedrich R, Droste-Franke B, Bachmann T, Gressman A, Tidblad J |pages= 75–129 |editor= Peter Bickel |editor2=Rainer Friedrich |publisher=European Commission Publications Office |location=Luxembourg |year=2005 |chapter-url=http://www.externe.info/externe_d7/sites/default/files/methup05a.pdf |isbn=978-92-79-00423-0 }}</ref>
* [[Anthropogenic climate change]] as a consequence of [[greenhouse gas emissions]] from the burning of fossil fuels and the rearing of livestock. The ''[[Stern Review]] on the Economics of Climate Change'' says "Climate change presents a unique challenge for economics: it is the greatest example of [[market failure]] we have ever seen."<ref>{{Cite book
  | last = Stern
  | first = Nicholas
  | author-link = Nicholas Stern
  | contribution=Introduction
  | title = The Economics of Climate Change The Stern Review
  | publisher = Cambridge University Press
  | year = 2006
  | url = http://www.hm-treasury.gov.uk/d/Part_I_Introduction_group.pdf
  | isbn = 978-0-521-70080-1
  }}</ref>
* [[Water pollution]] from industrial effluents can harm plants, animals, and humans
* [[Email spam|Spam emails]] during the sending of unsolicited messages by email.<ref>{{cite journal |last1=Rao |first1=Justin M |last2=Reiley |first2=David H |title=The Economics of Spam |journal=Journal of Economic Perspectives |date=August 2012 |volume=26 |issue=3 |pages=87–110 |doi=10.1257/jep.26.3.87 |doi-access=free }}</ref>
* [[Government regulation]]: Any costs required to comply with a law, regulation, or policy, either in terms of time or money, that are not covered by the entity issuing the edict (see also [[unfunded mandate]]).
* [[Noise pollution]] during the production process, which may be mentally and psychologically disruptive.
* [[Systemic risk]]: the risks to the overall economy arising from the risks that the banking system takes. A condition of [[moral hazard]] can occur in the absence of well-designed [[banking regulation]],<ref>{{citation |last1=White |first1=Lawrence J. |last2=McKenzie |first2=Joseph |last3=Cole |first3=Rebel A. |title=Deregulation Gone Awry: Moral Hazard in the Savings and Loan Industry |date=3 November 2008 |ssrn=1293468 }}</ref> or in the presence of badly designed regulation.<ref name="De1998">{{Cite report | last1 = De Bandt | first1 = O. | last2 = Hartmann | first2 = P. | year = 1998 |title = What Is Systemic Risk Today? | pages = 37–84 |publisher=Bank of Japan| url = http://www.imes.boj.or.jp/cbrc/cbrc-02.pdf |url-status=dead |archive-url=https://web.archive.org/web/20030417135702/http://www.imes.boj.or.jp/cbrc/cbrc-02.pdf |archive-date=17 April 2003}}</ref>
* Negative effects of [[Factory farming|Industrial farm animal production]], including "the increase in the pool of antibiotic-resistant bacteria because of the [[overuse of antibiotic]]s; air quality problems; the contamination of rivers, streams, and coastal waters with concentrated animal waste; animal welfare problems, mainly as a result of the extremely close quarters in which the animals are housed."<ref>{{Cite news
  | last = Weiss
  | first = Rick
  | title = Report Targets Costs Of Factory Farming
  | newspaper = Washington Post
  | date = 2008-04-30
  | url = https://www.washingtonpost.com/wp-dyn/content/article/2008/04/29/AR2008042902602_pf.html}}</ref><ref>{{Cite web
  | last = Pew Commission on Industrial Farm Animal Production
  | title = Proc Putting Meat on The Table: Industrial Farm Animal Production in America
  | publisher = The Johns Hopkins Bloomberg School of Public Health
  | url = http://www.ncifap.org/reports/ }}.
</ref>
* The depletion of the stock of fish in the ocean due to [[overfishing]]. This is an example of a [[Common Property Resource|common property resource]], which is vulnerable to the [[tragedy of the commons]] in the absence of appropriate environmental governance.
* In the United States, the cost of storing [[nuclear waste]] from [[nuclear plant]]s for more than 1,000 years (over 100,000 for some types of nuclear waste) is, in principle, included in the cost of the electricity the plant produces in the form of a fee paid to the government and held in the [[Nuclear Waste Policy Act|nuclear waste superfund]], although much of that fund was spent on [[Yucca Mountain nuclear waste repository]] without producing a solution.  Conversely, the costs of managing the long-term risks of disposal of chemicals, which may remain hazardous on similar time scales, is not commonly internalized in prices.  The USEPA regulates chemicals for periods ranging from 100 years to a maximum of 10,000 years.

==== Negative consumption externalities ====
Examples of '''negative consumption externalities''' include:
[[File:Negative_Consumption_Externality.png|thumb|Negative consumption externality]]
* [[Noise pollution]]: Sleep deprivation due to a neighbor listening to loud music late at night.
* [[Antibiotic resistance]], caused by increased usage of antibiotics: Individuals do not consider this efficacy cost when making usage decisions.  Government policies proposed to preserve future antibiotic effectiveness include educational campaigns, regulation, [[Pigouvian taxes]], and patents.
* [[Passive smoking]]: Shared costs of declining health and vitality caused by smoking or alcohol abuse. Here, the "cost" is that of providing minimum social welfare. Economists more frequently attribute this problem to the category of [[moral hazard]]s, the prospect that parties insulated from risk may behave differently from the way they would if they were fully exposed to the risk. For example, individuals with insurance against automobile theft may be less vigilant about locking their cars, because the negative consequences of automobile theft are (partially) borne by the insurance company.
* [[Traffic congestion]]: When more people use public roads, road users experience congestion costs such as more waiting in traffic and longer trip times. Increased road users also increase the likelihood of road accidents.<ref>{{Cite book | last1 = Small | first1 = Kenneth A. | last2 = José A. Gomez-Ibañez | year = 1998 | title = Road Pricing for Congestion Management: The Transition from Theory to Policy| publisher = The University of California Transportation Center, University of California at Berkeley| page = 213 }}</ref>
*  Price increases: Consumption by one party causes prices to rise and therefore makes other consumers worse off, perhaps by preventing, reducing or delaying their consumption. These effects are sometimes called "[[pecuniary externalities]]" and are distinguished from "real externalities" or "technological externalities". Pecuniary externalities appear to be externalities, but occur within the market mechanism and are not considered to be a source of [[market failure]] or inefficiency, although they may still result in substantial harm to others.<ref name="LiebowitzMargolis1994">{{cite journal |last1=Liebowitz |first1=S. J |last2=Margolis |first2=Stephen E |title=Network Externality: An Uncommon Tragedy |journal=Journal of Economic Perspectives |date=May 1994 |volume=8 |issue=2 |pages=133–150 |doi=10.1257/jep.8.2.133 |doi-access=free }}</ref>
* Weak [[public infrastructure]], air pollution, climate change, work misallocation<!--maintenance of infrastructure and cars as well as production and freight transport-->, resource requirements and land/space requirements as in the [[externalities of automobiles]].<ref>{{cite journal |last1=Gössling |first1=Stefan |last2=Kees |first2=Jessica |last3=Litman |first3=Todd |title=The lifetime cost of driving a car |journal=Ecological Economics |date=1 April 2022 |volume=194 |pages=107335 |doi=10.1016/j.ecolecon.2021.107335 |s2cid=246059536 |language=en |issn=0921-8009|doi-access=free |bibcode=2022EcoEc.19407335G }}</ref>