Key Diagrams - Negative Consumption Externalities

In this video we look at examples of negative consumption externalities and work through the main analysis video.

Externalities are spill-over effects from production and/or consumption for which no appropriate compensation is paid to one or more third parties affected. Negative consumption externalities are costs to third parties arising from the consumption of goods and services. The result is that the social marginal benefit curve is less than the private benefit. This is because of negative external benefits.