Positive externalities are when a third party, outside the transaction, suffers from a market transaction by others.
In an economy, economic activity results in what is referred to as an externality. A positive externality is a phenomenon which occurs when one person or a population of people in society receives a free benefit from a product that someone else is primarily utilizing.
A positive externality is the benefit to a third-party during an economic transaction. For example, education is considered a positive externality. As the skills acquired and knowledge learnt through education can benefit the wider community in many ways.
Hence, positive externalities are when a third party suffers from a market transaction by others.
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