External Costs
External costs, also known as externalities, are costs that are not borne by the person or organization that is responsible for them. These costs are instead borne by a third party, such as the environment, society, or other individuals. External costs can be both positive and negative, and can have a significant impact on the environment, society, and economy.
History of External Costs
The concept of external costs has been around since the late 19th century, when economist Alfred Marshall first introduced the idea of externalities in his book Principles of Economics. Since then, the concept has been widely studied and discussed in economics, and has become an important part of economic theory.
External costs are often associated with the production and consumption of goods and services. For example, the production of goods may lead to pollution, which can have a negative impact on the environment and society. Similarly, the consumption of goods may lead to increased demand for resources, which can lead to resource depletion and environmental degradation.
Table of Comparisons
| Type of Cost | Borne by |
|---|---|
| Internal Cost | Person or Organization Responsible |
| External Cost | Third Party |
Summary
External costs, also known as externalities, are costs that are not borne by the person or organization that is responsible for them. These costs are instead borne by a third party, such as the environment, society, or other individuals. External costs can be both positive and negative, and can have a significant impact on the environment, society, and economy. For more information on external costs, visit websites such as the World Bank, the International Monetary Fund, and the United Nations Environment Programme.
See Also
- Internal Costs
- Environmental Costs
- Social Costs
- Economic Costs
- Opportunity Costs
- Marginal Costs
- Sunk Costs
- Transaction Costs
- Production Costs
- Consumption Costs
