Explain “positive externalities” in plain language.
A simple explanation of the term “positive externality” for middle school students is that when an activity or project is undertaken, it has a positive effect on those who are not directly involved in the activity or project. In other words, it is the spread of “positive effects” from that activity to those around it.
For example, suppose a company undertakes a project to clean up a park. Although only the company’s employees participate in this project, the cleanliness of the park will make everyone in the community who uses the park feel good about themselves. In this way, people not directly involved in the project also benefit, which is why this is called a “positive externality.
What is mentioned in this text is a collection of projects that have such positive effects, such as open source software (OSS), which is software that anyone is free to use and improve, and many people who are not part of the project that develops it can benefit from its use. can benefit from its use. That is why it is regarded as having “positive externalities.
Give an example with no externalities and an example with negative externalities.
An example of an activity with no externalities is when an individual reads at home. In this case, the direct effect of the individual reading a book is limited to the individual and has no particular effect on others. In other words, there is no externality because no positive or negative effects occur on others from the activity.
On the other hand, an example of a negative externality could be air pollution from a factory. For example, if the smoke emitted by a factory in the process of producing its products deteriorates the air quality in the surrounding area, the pollution may harm the health of the surrounding residents in addition to the factory management and those who directly benefit from the factory. In such cases, this is called a “negative externality” because the factory’s activities have a negative impact on the surrounding area.
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