Externalities

It's important to understand these spillover effects and their impacts on economic value.

Negative externalities on production occur when producing an item imposes a cost on those not directly involved in producing or consuming the item.(Pollution)

Positive externalities on production occur when producing an item confers a benefit on those not directly involved in producing or consuming the item.

Negative externalities on consumption occur when consuming an item actually imposes a cost on others.(Cigarettes)

Positive externalities on consumption occur when there is a benefit to society of consuming an item above an beyond the direct benefit to the consumer of the item.(Deodorant 除臭剂)

This market failure, at a fundamental level, arises because of a violation of the notion of well-defined property rights, which is in fact a requirement for free markets to function efficiently. This violation of property rights occurs because there are is no clear ownership of air, water, open spaces, and so on, even though society is affected by what happens to such entities.