what is a spillover cost in economics 
similar to spillover effects are spillover costs more commonly known as negative externalities a spillover cost is a cost incurred by any third party outside of a transaction without their agreement or without compensation pollution is popularly used to illustrate spillover costs take a livestock production facility for instance while individuals living in proximity to such a facility may not be participants in the agricultural trade they may still bear costs associated with it such as exposure to unpleasant odors or risk of contaminated waterways 