When costs spill over to third parties there is a(n?

When costs spill over to third parties, there is a negative externality. This occurs when the actions of individuals or businesses impose costs on others who are not directly involved in the transaction, leading to a misallocation of resources and potential market failure. Examples include pollution affecting nearby communities or congestion caused by increased traffic. Addressing these externalities often requires government intervention or regulatory measures to align private costs with social costs.