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21-09-2021
Social Studies

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What is the relationship between negative and positive externality?

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jjohnsonnota25 jjohnsonnota25

21-09-2021

A negative externality exists when a cost spills over to a third party. A positive externality exists when a benefit spills over to a third-party. Government can discourage negative externalities by taxing goods and services that generate spillover costs.

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