A positional externality is a cost or benefit realized by a third person which occurs when a payoff, however it's defined, depends upon a person's relative performance. One of the reasons given for banning steroid use (besides the fact that they have known health risks) is that it improves one athlete's performance, possibly, at the expense of another athlete who has not chosen to use steroids. The loss of position by the non-user gives him an incentive to become a user to regain his relative position. A steroids-arms race is a possibility.
The authors of the new book about Barry Bonds entitled Game of Shadows: Barry Bonds, BALCO, and the Steroids Scandal that Rocked Professional Sports (by Marki Fainaru Wada and Lance Williams of the San Francisco Chronicle) suggest that Bonds' alleged use of steroids occured after the 1998 season, the season when Mark McGwire and Sammy Sosa stole the show:
The excerpt spells out in vivid detail what attracted Bonds to performance-enhancing drugs: his intense jealousy of McGwire's 70-home run season and the national hero worship it created.
...McGwire's historic season drove Bonds to wander into territory he had previously avoided, according to the excerpt.
"To Bonds it was a joke," one passage reads. "He had been around enough gyms to recognize that McGwire was a juicer. Bonds himself had never used anything more performance enhancing than a protein shake from the health-food store. But as the 1998 season unfolded, and as he watched Mark McGwire take over the game -- his game -- Barry Bonds decided that he, too, would begin using what he called 'the s -- .' "
If true, it would seem that the positional externality was of Bond's making because, in his mind, his payoff depended on his placement in the hierarchy of players. The authors suggest that BB couldn't handle being outdistanced by McGwire in terms of the attention given to him by fans and reporters. According to the article, Bonds once got pissed off because Giants officials had placed a rope around the batting cage in their home stadium to control the crowd that gathered when McGwire made Apollo rockets out of baseballs. So to get back to the top of the heap, Bonds started using "the s--."