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Simple English definitions for legal terms
spillover
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A quick definition of spillover:
Spillover: When someone does something that affects other people or the environment around them, it can have positive or negative consequences. These consequences are called externalities. A positive externality is when someone's actions benefit others without them having to pay for it, like when a neighbor plants a beautiful garden that everyone can enjoy. A negative externality is when someone's actions harm others without compensating them, like when a factory pollutes a nearby river and makes it unsafe for people and animals to use. Spillover is another word for externality, and it's important to consider these effects when making decisions that impact others.
A more thorough explanation:
Spillover is a term used to describe the unintended consequences of economic activity. It refers to the social or monetary effects that occur as a result of an individual or business's actions, which can either benefit or harm others without compensation.
For example, if a factory releases pollutants into the air or water, nearby residents may experience negative health effects or damage to their property. This is an example of a negative externality, where the factory's actions harm others without paying for the damage caused.
On the other hand, if a homeowner invests in landscaping their property, it can increase the value of neighboring homes. This is an example of a positive externality, where the homeowner's actions benefit others without receiving compensation.
Spillover effects can have significant impacts on individuals and communities, and are an important consideration in economic decision-making.