Economic Definition of external cost. Defined.
Offline Version: PDF
Term external cost Definition: A cost that's not included in the market price of a good because it's not included in the supply price. Pollution is an example of an external cost if producers aren't the ones who suffer from pollution damages. External cost is one type of market failure that causes inefficiency.
« external benefit | externalities »
Permalink: https://glossary.econguru.com/economic-term/external+cost