Economics Environmental Externalities Questions
A positive externality in environmental economics refers to a situation where the actions of a producer or consumer result in benefits to third parties or society as a whole, without these benefits being reflected in the market price. In other words, it is a spillover effect that generates positive outcomes for individuals or the environment beyond what is directly accounted for in the market transaction. For example, when a company invests in renewable energy sources, it not only reduces its own carbon emissions but also contributes to the overall reduction of pollution and climate change, benefiting society as a whole.