Externalities
Abstract
When the actions of one player affect the environment of another player, we say that there are externalities . In economics, two types of externalities are often discussed: consumption and production externalities. The former externality describes a situation where a player’s utility function is directly affected by another player’s actions (playing loud music). The latter describes a situation where the production function of a player is directly affected by another player’s actions (polluting). Externalities may arise in economies through public goods, common-pool resources, technological spillover, strategic interactions, and so on.
Fields of Study & Subjects
Game Theory and Applications
Game Theory and Voting Systems
Experimental Behavioral Economics Studies
Publication details
- Journal / source
- Cambridge University Press eBooks
- Pages
- 162–190
- Publication date
- 14 March 2026
- Language
- EN
- Document type
- Book chapter