 Externalities are effects of economic transactions on individuals that are not party to the transaction. The paradigm example is pollution: a company produces some good the production process for which is “dirty” in that it affects individuals independently of whether or not they are customers of the company. If such effects are undesired, as in the case of pollution, they are called negative externalities; if they are desired, positive externalities. A paradigmatic example of a positive externality is the pollination created by a honey producer’s bees. Individuals benefit from pollination whether or not they buy honey.