Externalities for business decision making of circular economy implementation in smart cities

Externality is either an indirect cost or indirect benefit that is caused by one party but financially incurred or received by another. Externalities can be negative or positive. A negative externality is the indirect imposition of a cost by one party onto another. A positive externality, on the other hand, is when one party receives an indirect benefit as a result of actions taken by another. For a successful business model, direct and indirect benefits and costs must be established to derive a positive business case (e.g. based on benefit over cost ratio). This paper contributes to Eco4All by deriving new insights into the stakeholders’ challenges, consumers’ value chain, business processes and obstacles in the implementation of circular economy concepts within smart city environments. The main aim of the study is to determine externalities and enable the policies to implement a common circularity framework for inclusive application and assessment in smart cities to support decision-making for all value chain stakeholders and consumers enhancing the implementation level of the European Circular Economy Action Plan (ECEAP).