# Externality

- Canonical URL: https://www.gerhardmerk.de/externality
- Post ID: 595056
- Modified: 2023-07-25T21:00:00+00:00
- Language: en

## Definition

The costs of a private good are generally paid by the buyer through the price. If, however, the action of a provider has advantages or disadvantages - also for others - and if these effects are not included in the market price, this is called an externality: a shift to the outside. - A positive externality is one in which benefits accrue to others from the activity, such as to the financial community from the activities of regulators. A negative externality is when the activity results in disadvantages for others, as was the case in the subprime crisis of 2007, when banks in the U.S. lent recklessly and affected institutions worldwide. - For externalities with a strong spill-over effect on other areas, the term spill-over is also used (also in German; sometimes in one word, i.e.: spillover). - See spill-over effect. Attention: The financial encyclopedia is protected by copyright and may only be used for private purposes without express consent! University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec. Professor Dr. Eckehard Krah, Dipl.rer.pol. E-mail address: info@ekrah.com https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk https://www.jung-stilling-gesellschaft.de/merk/ https://www.gerhardmerk.de/

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