Simple English definitions for legal terms
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Externalities are the effects of someone's actions that affect other people or the environment, either positively or negatively. These effects can be good or bad, and they can happen without the person who caused them paying for them or compensating those affected. For example, if a factory pollutes a nearby river, it's a negative externality because it harms the people and animals who rely on the river. On the other hand, if someone plants a beautiful garden in their yard, it's a positive externality because it makes the neighborhood more attractive and enjoyable for everyone.
An externality is a consequence or side effect of an economic activity that affects someone who is not directly involved in that activity. These effects can be positive or negative and can be social or monetary in nature.
These examples illustrate how externalities can impact people who are not directly involved in an economic activity. In the case of the negative externality, the factory is causing harm to others without paying for the damage it causes. In the case of the positive externality, the homeowner is providing a benefit to others without receiving any compensation for their efforts.