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Browse thousands of words and phrases selected by Financial Times editors and suggest new terms for the glossary.

 

Term of the day

externalities

Positive externalities can be defined as cost savings to a company that result from the concentration of firms and industries at a given location. The net benefit to being in a location together with other firms, is argued to increase with the number of firms and industries at the location, creating external economies.

(Positive externalities can also result from the external provision of a benefit, such as a road, to a company that previously had poor infrastructure connnections. It is also...