What are positive externalities of consumption
An external benefit or a spillover benefit.A positive externality of consumption is an external benefit caused to a third party by someone's consumption of a good or service this means that for example, when you consume a good/service, someone else is going to benefitAvoiding a host of childhood diseases, that child can benefit more from school and share her learning as a daughter, a worker and a mother.Positive externalities also result in inefficient market outcomes.As a result, the msb is higher than the mpb and demand.
It's common for individuals to under consume these goods because the external benefits are usually not one of the determining factors when considering whether to make a purchase.A positive consumption externality occurs when consuming a good cause a positive spillover to a third party lying outside the transaction.Positive consumption externality when consuming a good gives a benefit to others.Examples include consumption of education and health care.Positive consumption externalities can arise when consuming a good or service generates benefits to other individuals.
However, goods that suffer from positive externalities provide more value to individuals in society than is taken into account by those providing the goods.E.g you are able to educate other people and therefore they benefit as a result of your education.This means that the social benefits of consumption exceed the private benefits the social marginal benefit curve (smb) is drawn higher than private marginal benefit (pmb)Externalities lie outside the initial market transaction and (without state intervention), they are not reflected in the market price.
