what are positive externalities?
Positive externalities exist when the marginal social benefit of production and or consumption exceeds the marginal private benefit i.e. production and/or consumption generate external benefits that may go under-valued by the market There are plenty of examples of economic activities that can generate positive externalities: Industrial training by firms: This can reduce the costs faced by other firms and has important effects on labour productivity. A faster growth of productivity allows more output to be produced from a given amount of resources and helps improve living standards throughout the economy. See the revision notes on the production possibility frontier Research into new technologies which can then be disseminated for use by other producers. These technology spill-over effects help to reduce the costs of other producers and cost savings might be passed onto consumers through lower prices Education: A well educated labour force can increase efficiency and produce other impor
