other residents of the area also benefit from better security without bearing cost. Negative Consumption Externality A person smoking cigarette - it gives satisfaction to that person, but this act causes hardship (dissatisfaction) to the non-smokers who are driven to passive smoking. Positive Production Externality The ideal location for beehives is orchards (first growing fields). While bees make honey, they also help in the pollination of apple blossoms.
The benefits accrue to both producers (honey as well as apple). This is called ‘reciprocal untraded interdependency. Suppose training is given for the workers in a company. If those trained workers leave the company to join some other company, the later company gets the benefit of skilled workers without incurring the cost of training.
Negative Production Externality When answering any question on negative externalities consider whether the external costs are significant and if so, whether they can be measured and valued accurately Examples of Negative Production Externalities Negative production externalities include pollution generated by a factory that imposes costs on others Air pollution from factories Pollution from fertilizers Industrial waste Noise pollution Collapsing fish stocks Methane emissions Consumption Positive Negative Private security Public safety Loud Speaker Noise Pollution Production Positive Negative Beehives Pollination Factory emission