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Finance Dictionary and Glossary of Investment Terms
externality
Definition 1.
The side effect on an individual or entity due to the actions of another individual or entity. For example, the production of energy in a nuclear power plant benefits the owners of the power plant, but creates externalities in the form of radioactive waste for the environment and its inhabitants.
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Definition 2.
A consequence, whether positive or negative, of an economic activity that is experienced by unrelated third parties.
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