Another example of information externality will be visible in the capital market and when one company will be disclosing the effect of valuation of other company security, so they will be helping other companies in order to gain upon the valuation of securities because it will be leading into a increase in value of the securities if reports are provided in similar direction.

For example, if Morgan Stanley advises its investor to purchase share of Apple at $100 for a target of $130 and after the shares have moved to $120, The Goldman Sachs will also raise the price target to $180, so it will be leading into informational positive externality and increase in the price.

consequences of information externalities on the efficiency of resource allocation will be reflecting an additional advantage through similar information and validation of the original position so it will be leading into maximization of the rate of return and it will be leading into a resource allocation based upon informations and it can lead to negative impact such as information asymmetry also.

The private market solution will be that there should be more regulation and there should be proper regulation of the transaction and higher disclosure norms should be maintained in order to eliminate the risk associated with the information asymmetry and creation of intended externality based upon informations.