What is a negative externality? Negative externalities are

Last updated: 7/9/2022

What is a negative externality? Negative externalities are goods or services that are subject to the free-rider problem. Negative externalities occur when the social cost of a good or service is lower than the private cost. Negative externalities are goods or services that one consumer can limit another consumer's use of. Negative externalities occur when the social cost of a good or service is higher than the private cost.