According to Announcement #$20,$ "externalities" are when when social costs $($or benefits$)$ exceed private costs $($or benefits$).$

For example, if I build and sell guitars for a living, I$\text{'}$m responsible for buying all of the inputs to production: wood, paint, tools, sandpaper, glue, etc. These things would be part of the "cost" of production. However, when I apply a nice shiny nitrocellulose finish to the guitar in my garage workshop, the chemical produces an overspray which may be damaging to the plants and pets of my neighbors. This damage is a cost of production that is "socialized" $-$ meaning someone else is paying for this cost $-$ not me$,$ the producer. This is a "negative" externality.

Ideally, I should pay ALL costs of production including the cost of any damage done to your plants or animals. This is true because I receive ALL benefits.

That is$,$ when I sell a guitar I get ALL the money $-$ my neighbors don't get a penny of it and yet l've imposed a part of the production cost on them. That is$,$ all benefits are 'private' but all costs are not $-$ some have been "socialized."

The goal then is "privatize" costs $-$ meaning to make sure all costs associated with producing a good or service are paid for by the producer since they receive all of the benefits.

The opposite would be to "socialize" costs $-$ meaning everyone must pay for the cost of producing the good or service whether one benefits from it or not.

The following are examples of goods or services that have "socialized" costs