Spillover Effect
Updated 2026-08-13
INTRODUCTION
English translation pending.
CORE DEFINITION
A spillover effect is the unintended impact, positive or negative, that activity in one domain has on other domains. Economically it is an externality: a cost or benefit imposed on unrelated third parties that market prices do not reflect, such as knowledge spillover or pollution. The scaffold is a scanner: before deciding, always ask what happens next door.
SCAFFOLDING EFFECT
Reduce cognitive load
- Scan past the boundary: list the third parties affected before deciding. - Quantify both signs: measure positive and negative externalities. - Internalize the spillover: use subsidies or taxes to bring it inside the price.
Anchor fast decisions
Prices only signal what is transacted, and effects that travel outside the transaction remain unpriced, so the decision maker does not bear them. Because those costs and benefits are real to the third party, welfare diverges from the market outcome until the spillover is internalized or deliberately cultivated.
MINIMUM ACTION
In progress 0/1Practice this model in one real situation:
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Source support: Explicit
- en.wikipedia.orghttps://en.wikipedia.org/wiki/Spillover_(economicsverified
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