Pecuniary externalities exist when the action of one agent increases the price of a good to other agents.

Question

Quizplus · Accepted Answer

Pecuniary externalities are also known as price externalities. They occur when the actions of one agent, such as increasing their demand for a good, affect the market price of that good, which then affects other agents in the market. As a result, there is a financial impact on other actors in the market.

Pecuniary Externalities Exist When the Action of One Agent Increases