When the benefits of an activity are received by those who are not directly involved in it: a

When the benefits of an activity are received by those who are not directly involved in it b. a positive externality exists.

Externality involves the uncompensated effect of an individual's actions on the welfare of a third party (person not directly involved in an activity). If the effect on the third party is beneficial, it is called a positive externality. On the contrary, if the effect on the third party is adverse, it is called a negative externality. For instance, a study in new technologies yields positive externalities since it results in knowledge that is utilized by other persons in various ways. Furthermore, historic buildings generate positive externality since individuals enjoy the sense of history and the beauty of such buildings.