Various type of externalities

Externalities occur when the consumption or production of a good impacts on people other than the producers or consumers that are participating in the market for that good. They are the side effects bourne by third parties. In each case the firms or the individuals will bear some form of cost known as the external cost. There are a number of types of externalities.
-Producer on producer externalities e.g. a copper smelting firm contributing to acid rain which affects the crops of surrounding farmers
-Producer on consumer externalities e.g. a copper smelting firm causing air pollution that causes tuberculosis
-Consumer on consumer externalities e.g. smokers causing smoking relating ailments in non- smokers
-Consumers on producer externalities e.g. passenger cars causing congestion and slowing business traffic
In addition to negative externalities, there are positive externalities i.e. benefits accruing to non-participants in the market place arising from the consumption and production of goods and services. These are the external benefits.
When externalities result in third parties having to use resources in response to the external costs and benefits, it would lead to a misallocation of resources, eventually resulting in market failure.

- Fangyi.