Main Page | See live article | Alphabetical index A social cost is a cost that is not reflected in the production cost of goods and services but is, however, borne by society at large. As such, it is an example of a negative externality. For example, the logging of trees for timber may result in the society losing a recreation area, shade, beauty, and air quality, but this loss is usually not quantified and included in the price of the timber that is made from the trees. As a result, individual entitities in the marketplace have no incentive to factor in externalities; this can lead to inefficiency, as more of an activity is performed than would be if its cost had a true accounting. The idea of social cost is often used as an argument for government action and against libertarianism. See also Externality Private cost This article is a stub. You can help Wikipedia by expanding it. This article is from Wikipedia. All text is available under the terms of the GNU Free Documentation License.