9) Benhabib and Farmer (1994) prove that this representative-agent model with externalities
is equivalent to a decentralized market economy with increasing returns at the firm level.
2009): "Cybersecurity: Stakeholder Incentives, Externalities
, and Policy Options", Telecommunications Policy, 33(10/11), 706-719.
and Policies, Journal of Economic Literature, 45(2): 373-399.
Of the five general categories of market failures, three are potentially relevant to corporate governance: information failure, agency failure, and externalities
(externalizing harm onto third parties).
By construction, all of our policies lead to the same reduction in greenhouse gas emissions; however, if there exist other negative externalities
associated with biofuels, then focusing only on greenhouse gas reductions understates the economic inefficiencies of performance standards.
Aslanbeigui and Medema (1998) illustrate three possible solutions to the problem of externalities
as outlined by Coase, if participants find it too costly to reallocate resources through contracts/markets.
Positive Real Externalities
Not Impounded into Bids of
Calculate the economic externalities
of an investment, both positive and negative, and include measurable externality benefits in the cost-benefit analysis used in the initial decision to build; and
The adoption of binary code as the universal standard--as the alphabet for globalized communications--generates highly positive externalities
often referred to in terms of network effects (Liebowitz and Margolis 2002).
1) At the core of this skepticism is the idea that because of systemic externalities
, a free market is exposed to episodes of boom and bust.
, most industries do not face socially optimal
insurance (or other means to pay) create fiscal externalities