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Law and Economics of Environmental Law
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What is an externality in the context of environmental law?
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A
A cost or benefit that is imposed on a third party as a result of an economic activity.
💡 Explanation:
An externality is a cost or benefit that is imposed on a third party as a result of an economic activity. In the context of environmental law, externalities can be positive or negative. For example, a factory that pollutes the air imposes a negative externality on the people who live nearby, while a forest that provides clean air and water provides a positive externality.