A Tentative Analysis of the Stability of a Competition Economy with Externalities
It has long been recognised that a consumer's preference or a firm's production possibility is itself affected by the allocation of resources among other consumers and firms. The presence of such dependent effects, usually referred to as "externalities" shows that not all the economic behaviour is mediated through the market price systems. While the problem of externalities has received increasing attention, analysis of its effects on the stability of a competitive economy appears to have suffered comparative neglect
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