externality

externality definition - business

externality

The impact of the action of one or more parties on an unrelated party or on society. For example, air pollution is an externality of generating electricity by means of a coal-fired power plant. Externalities can be either negative (as per the coal-fired power plant) or positive. Also called spillover.

The American Heritage® Dictionary of Business Terms Copyright © 2009 by Houghton Mifflin Harcourt Publishing Company. Published by Houghton Mifflin Harcourt Publishing Company. All rights reserved.

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