What is an example of an externality associated with having an airport built near your home?

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An externality is an effect that an economic activity has on third parties that are not directly involved in that activity. Externalities can be positive or negative in nature. The externalities related to building an airport include increased pollution in the neighborhood. Airports can affect the environment and result in...

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An externality is an effect that an economic activity has on third parties that are not directly involved in that activity. Externalities can be positive or negative in nature. The externalities related to building an airport include increased pollution in the neighborhood. Airports can affect the environment and result in harm to local plants and animals. These are all negative externalities.

However, as the source below states, positive externalities can result from building an airport, as the construction of an airport creates jobs. In addition, airports connect places, particularly isolated places that cannot easily be reached in other ways, to other cities and countries. Airports can be of vital importance to remote areas, as they are necessary to bring in vital supplies, such as fuel and medicine.

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First, we must remember that there are both positive and negative externalities.  Negative externalities are costs imposed on you by, in this case, having an airport near your home.  Positive externalities are benefits that you get from having the airport there.

Most people would think more about the negative externalities of having an airport near their home.  The obvious example of this is the noise.  At a busy airport, airplanes are taking off and landing all the time.  This causes a lot of noise, sometimes at very inconvenient times.  This is a cost that is imposed on you even if it is not really a monetary cost.

However, there are some positives that could come out of having the airport there.  The most likely positive externality is that there will be more amenities near your home.  For example, it is at least possible that there will be more restaurants near your home than there would be if the airport were not there.  It will also be easier for you to travel in the event that you want to go by air.

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