Which statement about externalities is correct?

• A. Externalities are costs or benefits borne by the market participants.
• B. Externalities are costs or benefits that are fully borne by private parties involved in the market.
• C. Externalities are costs or benefits not borne by market participants; negative: pollution from mining; positive: vaccination reduces disease spread.
• D. Externalities are the same as public goods; example: national defence.

Answer: (C)