eksternal

Eksternal is a term used to describe something that lies outside a defined boundary or system. In Norwegian and several other Scandinavian languages, eksternal is the standard word for external; in English, the equivalent term is external. The word appears across contexts such as science, business, and public policy.

In economics, eksternalitet (externality) describes a consequence of a market transaction that affects uninvolved third parties. Externalities can be negative, imposing costs on others, or positive, providing benefits to others. They arise when the private costs or benefits of a decision differ from the social costs or benefits.

Externalities are often categorized by origin: production externalities originate in the production process, while consumption externalities arise from the use of a good or service. Some analyses also distinguish direct versus indirect external effects.

Examples include negative externalities like air pollution from a factory that affects nearby residents, or positive externalities such as infectious disease vaccination that reduces spread beyond the vaccinated individual, and education that raises societal productivity.

Policy responses aim to internalize eksternalities, aligning private incentives with social welfare. Instruments include Pigouvian taxes or subsidies, regulations, or market-based approaches like tradable permits. Public provision of information or goods and stronger property rights can also address externalities.

Measuring externalities is challenging: they are not reflected in market prices, which can lead to market failure. Quantification often requires estimating social costs or benefits and dealing with uncertainty.