A spillover effect influencing the welfare of third parties not involved in transactions within a market place.

A prevalent negative externality is talking on cellphones and driving. The risk posed by driving while talking isn't just a risk to the driver; it's also a safety risk to others-especially people in other cars. Even if the person who is talking on the cellphone while driving decides that the benefits to him or her of taking a call is worth the cost, he or she isn't taking into account the cost to other people. As such, driving while talking generates serious negative externality and sometimes can have fatal consequences.
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