Market transactions frequently affect people who are NOT part of the transaction. These effects are called "externalities." Externalities occur when market transactions affect people who are EXTERNAL to the transaction.

Externalities can be positive or negative.

• A positive externality occurs when a market transaction creates a BENEFIT for someone who is not part of the transaction.
• A negative externality occurs when a market transaction creates a COST for someone who is not part of the transaction.

A neighbor who plants beautiful flowers in their yard. (You can enjoy looking at the flowers. You did not pay for their planting and upkeep, however.)

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RELATED LINKS:

• U.S. Copyright Office

• U.S. Patent & Trademark Office

• Copyright Information - from a law office
• Copyrights & Trade Secrets - from another law office

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