Complex sentence: An externality occurs when a transaction causes costs or benefits to a third party, often, although not necessarily, from the use of a public good: for example, if manufacturing or transportation cause air pollution imposing costs on others when making use of public air.
Split into simpler sentences: An externality occurs when a transaction causes costs or benefits to a third party, often, although not necessarily, from the use of a public good. For example, if manufacturing or transportation cause air pollution imposing costs on others when making use of public air.