Define negative externality and give an example of it

Marketing Dec 26, 2020

Define negative externality and give an example of it.

Expert Solution

A negative externality is a cost that is incurred by the third party, which is not involved in the action. One of the best examples of a negative externality is the smoke of cigarettes inhaled by the person who does not smoke. The other popular example of a negative externality is industry polluting the water and people who are living surrounding that area has to bear the brunt of polluted water.

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