Is “Externality” a Scrabble word?

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Yes
EXTERNALITY
Valid in at least one Scrabble dictionary

Valid in these dictionaries

SOWPODS / CSW
Scrabble UK & International
Valid
TWL / NWL
Scrabble North America
Valid
Large English Dictionary
General English word list
Valid

Meaning of Externality

/ekstəˈnælɪti/

noun
  1. 1.The state of being external or externalized.

  2. 2.A thing that is external relative to something else.

  3. 3.An impact, positive or negative, on any party not involved in a given economic transaction or act.

    Waste is a negative externality arising from consumption.