The architecture of securities clearing and settlement in the United States creates an externality: investors do not always bear the full cost of settlement risk for their trades and can impose some ...

This paper compares two estimators—the Border Approach and an Instrumental Variable (IV) estimator—using a unified framework where identifying variation arises from “preference externalities,” ...

For James Meade, the perfect example of a positive externality was the relationship between apples and bees. Imagine, wrote Meade in 1952, a region containing some orchards and some bee-keeping.

In the case of pollution—the traditional example of a negative externality—a polluter makes decisions based only on the direct cost of and profit opportunity from production and does not consider the ...

Production externality refers to a side effect from an industrial operation, such as a chemical company leaking improperly stored chemicals into the water table. Production externalities can be ...

In contrast, the accident externality per driver in low‐traffic states appears quite small. On balance, accident externalities are so large that a correcting Pigouvian tax could raise $66 billion ...

However, the externality also increases the aggregate cost to the economy and society making it a negative externality. Externalities are negative when the social costs outweigh the private costs.

It's an interesting point, but not the most important one, which is that a tax on size would seek to correct for the large negative externality associated with the systemic risk presented by too ...