Explain why second hand smoke can be considered an externality?

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2026-05-16 17:36

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Secondhand smoke is considered an externality because it imposes costs on individuals who do not actively participate in smoking. When a smoker lights up, the harmful effects of the smoke extend beyond the smoker to non-smokers in the vicinity, leading to health risks such as respiratory issues and increased healthcare costs. This negative impact on third parties is not reflected in the market transactions associated with tobacco products, highlighting the social costs of smoking that are borne by society rather than just the smoker.

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