A negative externality is a cost that is caused by some
economic activity but which is not paid by the entities that are directly involved in
the activity. In the case of road building, this would be costs that are incurred by
people who are not building or using the road.
A major
externality associated with road construction is the pollution that is caused by the use
of automobiles. As more roads are built, more cars use them. As more cars use them,
more pollution occurs and impacts even people who do not use the roads. A similar
impact would be excessive noise. If, for example, a large road is built near your
house, you will bear the cost of having to deal with all the extra noise even if you do
not use the road yourself.
Air pollution and noise
pollution, then, are two major negative externalities that are associated with the
building of roads.
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