Negative and positive externalities

A question from Yahoo! Answers:

Negative and positive externalities?

what are they?

They are costs and benefits that accrue to other people who are not involved in what you are doing because of what you are doing.

Let’s say you are constructing an office building across the street from a group of sidewalk cafes. While the construction is in progress, the cafes will be negatively impacted, as noise and dust from the construction site drive away the customers. That would be a negative externality. When construction is complete, however, the cafes will gain a large number of new customers who will be working in the new building. That would be a positive externality.

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