Externalities and Corporate Support for Minority Business Education

Economists have a concept called “externalities.” Externalities come in two forms, positive externalities and negative externalities. In general, an externality is defined as occurring when the actions of one person/organization/company provide a benefit (positive) or impose a cost (negative) to another person/organization/company, and the beneficiary does not compensate the provider of the benefit or the company imposing the cost does not compensate the person/organization/company harmed. The textbook examples of negative externalities include cases where a factory pollutes a river in the process of producing that poses uncompensated costs on fishing and recreation consumers and producers. Interestingly, economists consider externalities as an example of market failure because without intervention (regulation and or taxes) too much will be produced by the polluter. In effect, the producer is passing on cost to others who receive no direct benefit from the polluter. If the poll...

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