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1.3.2 Negative Externalities (Edexcel A-Level Economics Teaching PowerPoint)


Last updated 18 Sept 2023

This teaching powerpoint covers Negative Externalities.

Negative externalities are costs that are borne by society, not by the producers or consumers of a good or service. Pollution is one example, but there are many others. Noise pollution is another common negative externality. For example, a factory might produce a lot of noise that is annoying or even harmful to the people who live nearby. This is an external cost that the factory isn't taking into account in its production decisions. Similarly, traffic congestion is another classic example of a negative externality. Drivers cause congestion for other drivers, but they don't have to pay for the costs of that congestion.

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