In economics, what is a cost imposed on an uninvolved third party called?

In economics, a cost imposed on an uninvolved third party is called a negative externality.

Negative externalities occur when an activity creates a harmful spillover that is not fully reflected in the market price. Air pollution from a factory is a classic example: the producer and customer may transact voluntarily, while nearby residents bear health or environmental costs.

Because the private cost is lower than the full social cost, a market with a negative externality can produce more than the socially efficient quantity. Economists may describe the difference between private and social costs using marginal analysis.

Common policy responses include pollution taxes, emissions trading systems, regulation, and clearly defined property rights. The opposite case is a positive externality, where uninvolved people receive a benefit, as with some effects of vaccination or education. An externality differs from an ordinary business cost because it falls on people outside the transaction.