Economics Externalities Questions
A network externality refers to the positive or negative impact that an individual's consumption or production of a good or service has on the utility or value of that good or service for others. It occurs when the value of a product increases as more people use or adopt it, leading to a positive network effect. On the other hand, a negative externality refers to the negative impact that an individual's consumption or production of a good or service has on the well-being or utility of others, without compensation. It occurs when the cost of a product is borne by individuals or society, other than the buyer or seller, resulting in a market failure.