Although some activities impose costs on third parties other yield benefits. For example consider education. To a large extent the benefit of education is private. The consumer of education becomes a more productive worker and thus reaps much of the benefit in the from of higher wages. Beyond these private benefits however education also yields positive externality. One externality is that a more educated population leads to more informed voters which means better government for everyone. Another externality is that o more educated population tends to mean lower crime rates. A third externality is that a more educated population may encourage the development and dissemination of technological advances leading to higher productivity and wages for everyone. Because of these three positive externalities a person may prefer to have neighbors who are well educated. The analysis of positive externalities is similar to the analysis of negative externalitie...