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In economics, an externality is an indirect cost or benefit to an uninvolved third party that arises as an effect of another party's (or parties') activity. Externalities can be considered as unpriced goods involved in either consumer or producer market transactions. Air pollution from motor vehicles is one example. The cost of air pollution to society is not paid by either the producers or users of motorized transport to the rest of society. Water pollution from mills and factories is another example. We are all made worse off by pollution but are not compensated by the market for this damage. A positive externality is when an individual's consumption in a market increases the well-being of others, but the individual does not charge the third party for the benefit. The third party is essentially getting a free product. An example of this might be the apartment above a bakery receiving the benefit of enjoyment from smelling fresh pastries every morning. The people who live in the apartment do not compensate the bakery for this benefit. The concept of externality was first developed by economist Arthur Pigou in the 1920s. The prototypical example of a negative externality is environmental pollution. Pigou argued that a tax, equal to the marginal damage or marginal external cost, (later called a "Pigouvian tax") on negative externalities could be used to reduce their incidence to an efficient level. Subsequent thinkers have debated whether it is preferable to tax or to regulate negative externalities, the optimally efficient level of the Pigouvian taxation, and what factors cause or exacerbate negative externalities, such as providing investors in corporations with limited liability for harms committed by the corporation.Externalities often occur when the production or consumption of a product or service's private price equilibrium cannot reflect the true costs or benefits of that product or service for society as a whole. This causes the externality competitive equilibrium to not adhere to the condition of Pareto optimality. Thus, since resources can be better allocated, externalities are an example of market failure.Externalities can be either positive or negative. Governments and institutions often take actions to internalize externalities, thus market-priced transactions can incorporate all the benefits and costs associated with transactions between economic agents. The most common way this is done is by imposing taxes on the producers of this externality. This is usually done similar to a quote where there is no tax imposed and then once the externality reaches a certain point there is a very high tax imposed. However, since regulators do not always have all the information on the externality it can be difficult to impose the right tax. Once the externality is internalized through imposing a tax the competitive equilibrium is now Pareto optimal.
For example, manufacturing activities that cause air pollution impose health and clean-up costs on the whole society, whereas the neighbors of individuals who choose to fire-proof their homes may benefit from a reduced risk of a fire spreading to their own houses. If external costs exist, such as pollution, the producer may choose to produce more of the product than would be produced if the producer were required to pay all associated environmental costs. Because responsibility or consequence for self-directed action lies partly outside the self, an element of externalization is involved. If there are external benefits, such as in public safety, less of the good may be produced than would be the case if the producer were to receive payment for the external benefits to others.

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  1. S

    Aus Efflorescence on expoxy grout installed on the external balcony

    Work Done Epoxy grout was installed by the Grouting company on the tiles on the external balcony over a period of around 6 weeks during frequent rain after the tiler completed the tiling job without grout. During the application of the epoxy grout, the grout was shrunk or expanded at different...
  2. A

    External concrete slab...

    Have a small concrete slab with quite a lot of cracks in. Has any one used flexbone out doors or know if its suitable or any suggestions for uncoupling.
  3. D

    External corner wall half tile to fully tiled return-best way to trim?

    Hi, I am looking for advice about half tiling an external corner which meets a full tiled shower wall(over bath); unfortunately, I have cement board on the shower wall so cannot return (set back 30/50mm) as it will expose cement board. Any other suggestions would be appreciated? Cheers DTCB
  4. Ricardo1

    External Floor Tiles

    Hi, first time poster looking for advice on tiling a door step. I'm using 250mm x 250mm Victorian designed tiles, black & white in colour which seem to butt straight up together with limited spacing between. Can anyone advise on this & what grout to use. Thanks
  5. Dan

    BAL External Tiling Range

    I received an email about BAL External tile adhesive and grout this morning and thought I'd post it to our tiling news area of the forum because there isn't much actual tiling news in here. But if you're looking for workwear you're on a winner. :D :D (no offence to our awesome sponsor...
  6. M

    External tilling on a wet concrete path

    I am laying porcelain external tiles over a concrete path outside. The path has had self leveling poured on it and a coat of 50/50 sbr, water mix as a primer. The trouble is its been raining all morning and now it's cleared up but the path is still very damp from the rain. Can I still stick the...
  7. M

    HELP! External Grout

    Hi everyone, I am putting some porcelain tiles in the garden, on the floor, but also some against a wall (vertically). The tile shops have advised me to use this type of grout: https://www.toppstiles.co.uk/fixing...V8mDmCh3L9wISEAQYAyABEgKBE_D_BwE&gclsrc=aw.ds But from my understanding this...
  8. P

    Natural Stone Splitface external corners

    Hello, I’ve got a job with 300x160 split face slate, thickness ranges from 15mm to 25mm on the tile. Any advice on how to attack the external corners? I was thinking of purchasing a wet cutter for a mitre but having played around on a small cutter I’m still not satisfied that it’s going to look...
  9. A

    External tiling

    Heya, Please could someone tell me the simplest way to tile over this. Prep work including best products (adhesive, primer, levelling compound) needed. Much appreciated :)
  10. G

    Adhesive for external brick wall of my bungalow

    Hi, I am tiling the front of my bungalow (following removal of some broken 1970s tiles). Please can you suggest the best adhesive to use and if there are any surface preparations required to ensure the adhesion of porcelain tiles. Thanks for the advice.
  11. N

    Porcelain Loose external porcelain tile

    I got some everscape porcelain tile from Topp Tiles last year installed externally. It was put on a bed of mortar and a few of them has now come loose. These are the ones that lips just over a few mm over steps down hence the movement. Others seem ok as they are pretty heavy. How best can I...
  12. C

    External steps using porcelain tiles

    We have some existing brick and concrete slab steps we are looking to cover with 20mm porcelain tiles. We already have the tiles annd were planning to cover both the uprights and the steps. Should we use a metal edge to protect the corners of the steps? I was not sure if porcelain is likely to...
  13. S

    External Tiling

    I’ve been asked to tile a concrete block wall outside that is currently wet due to the dreadful weather... The tiles are natural slate in strips that interlock and are glued together . I’m thinking wait until the block work is dry and prime before tiling with a s2 adhesive The other side of the...
  14. C

    External tiling with porcelain - norcros rock-tite?

    We are looking at laying 20mm porcelain tiles outside. I am a bit confused over the different laying methods. Our landscaper is suggesting using hard core, then a scalping base, then 4:1 mix sharp sand and cement mix. Would this be ok? I was wondering if they need to be on a fully cured...
  15. C

    Advice on Tiling over a bitumen tanking membrane on an external balcony.

    Hi. I have a leaking balcony on my property it’s 3.5m x 1.25m so not large. Its a concrete floor with brickwork sides. I have put down a bitumen based tanking membrane I would like to know the best way to put tiles down on top of this. any help would be appreciated. Charlie
  16. B

    Tiling an external garage walls

    Hi Guyz I was wondering if anyone could offer any advice, I have a client, who is requesting a cost for tiling an external garage, I was thinking of securing hardibacker boards using adhesive & then fixing 12 screws per board to secure the boards, then using a good quality adhesive, and tiling...
  17. D

    External Split Face tiling preparation

    Good morning everyone, I have been out to look at an external tiling job on a self build. The walls at present are just breeze blocks. What preparation needs to be done prior to tiling the split face ? Would it be a case of just waterproofing with a membrane or would Hardie boards need...
  18. JMC tiling

    Porcelain coping on top of external walls/breeze block using Porcelain. Yes or No?

    Evening all, Got an external job on the go and the customer has requested the tops of the breeze block walls to be tiled using the same external 10mm porcelain tiles as the patio. My question is would it be ok to tile directly to the blocks or would I need to overboard (mechanically fixed) them...
  19. L

    Screed - External Porcelain Patio

    Hi Got a project due to start in Easter, approx 45m2 patio of porcelain tiles. I have already laid the screed last year to allow it to dry for the 6-8 weeks recommended, with a 1/60 fall. I have 2 questions now Should I have left an expansion gap in the screed? There are 4 different areas...
  20. acaciaguy

    Resin for mitred external corners

    Hello all I am doing mitred external corners. They have come out really nice using a grinder. I have left about 2mm edge on the face. I’m planning on filling with resin. Where do you get it from? Should resin colour match grout or tile. If you have any finished pics of your work that would...
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