formally such system effects are externalities whose textbook definition is an effect that is not accounted for by the one who causes it the essence of an externality is the lack of reciprocity between those who are affected by them to those who cause them usually markets establish such feedback mechanisms i give to you you pay me i receive from you i pay you in such cases the price mechanism is incapable of organising the usual reciprocal exchanges between those who create a good or a bad and those who enjoy it or suffer from it consequently negative externalities are overproduced and positive externalities are underproduced in the case of system effects in the electricity sector the relative newness of the issue the lack of firm information and the lack of an appropriate allocation of responsibilities all have contributed to a situation in which system effects in the electricity sector are part of a general entropy of costs where costs rise and profits fall without reasons that are clearly identifiable