Public Policy Toward Pecuniary Externalities

Volume: 29, Issue: 4, Pages: 304 - 325
Published: Jul 1, 2001
Abstract
Pecuniary externalities create third-party effects through changes in relative prices or asset prices. Unlike technological externalities, they do not misallocate resources and are necessary for the market to work efficiently. However, the political process does not differentiate pecuniary from technological externalities and often tries to prevent pecuniary externalities, which creates resource misallocations. The article shows how pecuniary...
Paper Details
Title
Public Policy Toward Pecuniary Externalities
Published Date
Jul 1, 2001
Volume
29
Issue
4
Pages
304 - 325
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