Economics Externalities Questions
There are three main types of externalities: positive externalities, negative externalities, and network externalities. Positive externalities occur when the actions of one party benefit others who are not directly involved in the transaction. Negative externalities, on the other hand, occur when the actions of one party impose costs on others who are not directly involved in the transaction. Lastly, network externalities refer to situations where the value of a good or service increases as more people use it.