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Two (lay) dogmas on externalities

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  • Vaughn Bryan Baltzly

    (Texas State University)

Abstract

I argue that much current thinking on externalities—at least among “lay political economists” (but even, on occasion, among professional economists)—is saddled with two analytical errors. The first is what I call coextensivism: the conflation of public goods and externalities. The second error is what I call externality profligacy: the conflation of economic and “social” externalities. The principal dangers presented by these two “dogmas on externalities” are that, while in their grips, we are under-disposed to seek negotiated, market-based solutions (of a broadly Coasean nature) to challenges posed by economic externalities, and over-disposed to seek coercive, state-based solutions (of a broadly Pigouvian nature) to challenges posed by social externalities.

Suggested Citation

  • Vaughn Bryan Baltzly, 2024. "Two (lay) dogmas on externalities," Public Choice, Springer, vol. 201(3), pages 471-494, December.
    • Handle: RePEc:kap:pubcho:v:201:y:2024:i:3:d:10.1007_s11127-024-01167-z
    DOI: 10.1007/s11127-024-01167-z
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    References listed on IDEAS

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    Cited by:

    1. Pablo Paniagua & Veeshan Rayamajhee & Ilia Murtazashvili, 2024. "Complex externalities: introduction to the special issue," Public Choice, Springer, vol. 201(3), pages 377-385, December.

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