"It's actually a fairly simple concept. It simply says that when someone is doing something – they're buying something, they're engaged in some activity – obviously, they are doing that for their own good, but there can be impacts on other people," says Walden, North Carolina Cooperative Extension economist and professor of agricultural and resource economics. "Those impacts can be good, in which we call that impact - that side effect if you will - a positive externality or they can be bad, in which case we call those negative externality.

"A good example of a negative externality is pollution. You and I drove here to do these tapings today - we didn't want to pollute, we like the environment - yet we did pollute, we created this adverse side effect. A good example of a positive externality is education. One reason why the state subsidizes higher education is because educated workers are better taxpayers, they attract better paying jobs, and that's all good for everyone in the state, not just for them."

Walden adds, "The economic approach to dealing with externalities is to subsidize those positive externalities - like I said, with higher education. For negative externalities, it's not necessarily to prohibit them but is to assess their cost, and then tax people. If they want to go ahead and produce that negative externality, tax them, tax them enough such that the money raised will be able to handle the adverse effects."