In public choice theory,
Costs on others without compensation.
A) group conflicts
B) rational choices
C) externalities
D) deterrents

Question

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Externalities refer to costs or benefits that are imposed on third parties without compensation. This can occur when individuals or businesses engage in activities that create spillover effects on others. For example, pollution from a factory can harm the health of nearby residents, but the factory may not bear the full cost of these negative effects. Public choice theory examines the incentives and behavior of individuals and groups within the political process, and externalities are an important concept within this framework.

In Public Choice Theory