Economics Externalities Questions
A network externality refers to the positive or negative impact that the use or adoption of a product or service has on the value or utility of that product for other users. It occurs when the value of a product increases as more people use it, leading to a positive network externality, or decreases as more people use it, resulting in a negative network externality.
On the other hand, a negative consumption externality refers to the negative impact that the consumption of a good or service has on individuals or society that are not directly involved in the consumption. It occurs when the consumption of a product or service imposes costs or harms on third parties, such as pollution from a factory or noise from a construction site.