From the perspective of economics, the concept of externality was put forward by Marshall and Pigou at the beginning of the 20th century, which means that an economic subject (producer or consumer) has a favorable or unfavorable influence on the welfare of bystanders in its own activities.
The benefits (or gains) brought by this favorable influence or the losses (or costs) brought by the unfavorable influence are not obtained or borne by the producers or consumers themselves, but the "non-market" side effects of one economic force on another.
The existence of externalities leads the society to break away from the most effective production state, which makes the market economic system unable to realize its basic function of optimizing resource allocation.
Extended data:
1 Negative externalities in production
The pollutants discharged by factories in production are a negative externality. Its social costs include the government's expenditure on pollution control, the reduction of natural resources and the harm of pollutants to human health.
2 Positive externalities in production
Education is a positive externality. Talents trained by a perfect education system will contribute to social construction, which is beneficial to everyone. Building a beautiful building so that everyone in this area can enjoy this landscape is also a positive externality.
3 negative externalities in consumption
Some people have dogs, and dogs like to bark constantly every night. This man is used to nightlife, so he won't worry about it. However, his neighbors are used to going to bed early, and every day they are disturbed by the barking of dogs, so they have to spend money on sleeping pills. Keeping a dog here is a negative externality for this neighbor.
4 positive externalities of consumption
For a recent example, someone has been vaccinated with influenza A vaccine H 1N 1. This kind of consumption is not only good for yourself, but also good for people around you, that is, it reduces the source of infection of the virus. This is also a positive externality.
References:
Baidu Encyclopedia-Externality