A note on teaching externalities: Distinguishing between consumption and production externalities

The vast majority of microeconomics textbooks present production externalities as negative and consumption externalities as positive. Yet, both producers and consumers can cause positive and negative externalities. By discussing all four cases of externalities and separating the price effects for buyers and sellers, authors would offer a much clearer exposition of externalities and help resolve the misconception that negative externalities lead to prices that are too low.