negative externality

Definitions

Economics

  • A harmful externality; that is, a harmful effect of one economic agent's actions on another. Considered a distortion because the first agent has inadequate incentive to curtail the action. Examples are pollution from factories (a production externality) and smoke from cigarettes (a consumption externality).
  • abbreviationharmful externality
    (written as Negative externality)
  • negative externality.
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