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Externalities

The New Palgrave Dictionary of Economics

Abstract

Competitive equilibria are Pareto optimal when they exist if preferences are locally non-satiated and if externalities are not present in the economy. Why externalities upset the first fundamental theorem of welfare economics and which economic policies can remedy this failure are the major questions addressed below.

This chapter was originally published in The New Palgrave: A Dictionary of Economics, 1st edition, 1987. Edited by John Eatwell, Murray Milgate and Peter Newman

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  1. http://link.springer.com/referencework/10.1007/978-1-349-95121-5

    J. J. Laffont

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  1. J. J. Laffont
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    Laffont, J.J. (1987). Externalities. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95121-5_126-1

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    • DOI: https://doi.org/10.1057/978-1-349-95121-5_126-1

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    • Publisher Name: Palgrave Macmillan, London

    • Online ISBN: 978-1-349-95121-5

    • eBook Packages: Springer Reference Economics and FinanceReference Module Humanities and Social SciencesReference Module Business, Economics and Social Sciences

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    Chapter history

    1. Latest

      Externalities
      Published:
      13 March 2017

      DOI: https://doi.org/10.1057/978-1-349-95121-5_126-2

    2. Original

      Externalities
      Published:
      18 October 2016

      DOI: https://doi.org/10.1057/978-1-349-95121-5_126-1

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