Positive externality

The externality positive refers to all kinds of beneficial effects for society generated by production or consumption activities, which are not included in costs.

The reality is that all our actions within the society in which we live, however small or simple it may seem, cause effects on the others that compose it. That is, this type of externality occurs when the actions we take as a company, individual or family cause pleasant and useful side effects in everything else.

These positive effects are not incorporated in the total costs of your action. Given that the positive effects that stand out, are not present either in the price of production, when consumed or used.

Positive externality, like negative externality are concepts of economic science. However, these can also be applied outside the economic field. That is, not only economic activitiesproduce effects of externality, but also those that are classified as non-economic.

Thus, externalities refer to perceptible and direct effects that are not included in the price paid to produce, use or consume.

Examples of positive externality

We can provide a large number of examples of positive externalities, however, we are going to offer a paradigmatic example that greatly deepens positive externalities.

Positive externality occurs when, for example, the State or any company or institution creates a medical center with the objective of providing first aid care to all members of a certain region, area or region. This action has direct positive effects for that population and even effects that cannot be visible to everyone.

Suppose that a child’s first-aid action saves a child’s life. Now, let’s imagine that over time this child becomes one of the best citizens.

Let us think now that this, for reasons of life, becomes one of the best presidents of the nation. Then, the benefits radiated to all would be enormous. Therefore, the effects of this health center are very positive, without the need to pay for its benefits.

Other examples of positive externalities are found in the following:

  • Public goods.
  • Subsidy to scientific research.

As can be deduced, positive externalities are a complex ilation of actions and effects that entail costs.

Incentives for positive externalities

The State can carry out and intensify actions that favor positive externalities. How to subsidize or finance certain scientific research, creation or modernization of hospitals, grants, etc. Likewise, the State can establish rules and favor laws to avoid and control the emission of pollutants.

Likewise, not only the State but also society must provide a cultural and educational framework to facilitate positive externalities.

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