Price Externalities Influence Public Policy

If a decision affects persons who are not party to the decision, then that decision has external effects. If the external effect is due to a change in price, then the externality is called a pecuniary or price externality. Any one firm's output decision, by affecting product price, imposes pric...

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Bibliographic Details
Published in:Public choice 1975-10, Vol.23 (1), p.1-10
Main Author: Goldin, Kenneth D.
Format: Article
Language:English
Subjects:
Airports
Campaign contributions
Competition
Consumer economics
Consumers
Corporate profits
Cost benefit analysis
Customer services
DOMESTIC POLITICS
Economic benefits
Economic externalities
Economic rent
Economists
Efficiency
Externality
Free rider effect
Lobbying
Monopoly
ORGANIZATIONAL BEHAVIOR, NONEXECUTIVE
POLITICAL AND POWER PROCESS
POLITICAL DEVELOPMENT OR POLITICAL DEGENERATION
PUBLIC ADMINISTRATION
Public good
PUBLIC POLICY
Regulation
SYSTEMS ANALYSIS
Tariffs
Taxicabs
Taxpaying
Wage & price controls
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Summary:If a decision affects persons who are not party to the decision, then that decision has external effects. If the external effect is due to a change in price, then the externality is called a pecuniary or price externality. Any one firm's output decision, by affecting product price, imposes price externalities on all of the other firms in its industry and their customers. Similarly, a large public work, by affecting rentals on adjacent properties, imposes price externalities on both landlords and tenants.
ISSN:0048-5829
1573-7101
DOI:10.1007/BF01718085