Other Examples of Positive Externalities

Although technology may be the most prominent example of a positive externality, it is not the only one. For

example, vaccinations against disease are not only a protection for the individual, but they have the positive

spillover of protecting others who may become infected. When a number of homes in a neighborhood are

modernized, updated, and restored, not only does it increase the homes' value, but other property values in

the neighborhood may increase as well.

The appropriate public policy response to a positive externality, like a new technology, is to help the party

creating the positive externality receive a greater share of the social benefits. In the case of vaccines, like flu

shots, an effective policy might be to provide a subsidy to those who choose to get vaccinated.
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