Briefly, describe negative externality and provide a real-life example

Marketing Dec 25, 2020

Briefly, describe negative externality and provide a real-life example.

Expert Solution

Negative externality prompts market failure in the economy and it happens when the production of a good creates negative spillover cost which is passed on to society and this could be ecological cost, wellbeing cost, and so on.

A negative externality is the air & water contamination that is created by the manufacturer throughout the production process. For example, XYZ Corporation is a chemical company that pollutes the air when it produces goods.

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