What does the phrase “Internalizing an External Cost” mean?
What does the phrase “Internalizing an External Cost” mean?
I was chatting with a collegue about environmental issues, and they mentioned how companies often "internalize an external cost" by passing environmental cleanup expenses onto society. I'm curious about what that phrase really means.
Sofia_Ioannou
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Last update: 1 minute ago
1 answers
This is really a serious issue, Sofia Loannou.
Internalizing an external cost or externality is when a company or an individual needs to incorporate external costs into the decision-making process of those who are involved.
External costs are the negative effects to a third party from the production or consumption of a product. Examples of this are environmental and health problems caused by harmful materials used in production and radiation from nuclear power plants.
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Last update: 11 months ago
