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Lecture 24

MGEA02H3 Lecture Notes - Lecture 24: Oligopoly, Externality


Department
Economics for Management Studies
Course Code
MGEA02H3
Professor
Gordon Cleveland
Lecture
24

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Week 12MGEA02
Externalities and Public Goods
An externality is created when an action (e.g.,
buying or selling a good) affects bystanders
as well as market participants.
(bystander = other member of society, not
participating in the purchase and sale that
ends up affecting them)
An externality can be positive and be called
an external benefit (or positive externality)
An externality can be negative and be called
an external cost (or negative externality)
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