In economics, an externality (also called an external effect or spillover effect) is an indirect cost or benefit to an uninvolved third party that arises as an effect of another party’s (or parties’) activity. Externalities can be thought of as unpriced goods involved in either consumer or producer market transactions. Air pollution from motor vehicles is one example: the cost air pollution imposes on society is not paid by the producers or users of the vehicles to the rest of society. Water pollution from factories is another: all consumers are made worse off by the pollution, but the market provides no compensation for the damage. A positive externality is when an individual’s consumption in a market increases the well-being of others, but the individual does not charge the third party for the benefit. The third party is essentially getting a free product. An example might be an apartment above a bakery that gets the smell of fresh pastries every morning. The people living in the apartment do not compensate the bakery for this benefit.
From Wikipedia: Externality (Chinese edition, translated; see also the English article)
In the prospectus: The founders’ letter, on what economists call “externalities” (page image) (original filing on SEC EDGAR)