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Externalities, internalization and fluctuations

Abstract : In this paper we introduce consumption externalities as developed by Arrow in overlapping-generations economies. We show how the internalization of externalities-through exchanges at markets for externalities-may give rise to new phenomena such as altered stability properties and fluctuations, even though it restores optimality.
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Submitted on : Friday, November 5, 2021 - 7:08:56 PM
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  • HAL Id : hal-03417501, version 1
  • SCIENCESPO : 2441/10275



Hervé Crès, Christian Ghiglino, Mich Tvede. Externalities, internalization and fluctuations. International Economic Review, Wiley, 1997, 38 (2), pp.465 - 477. ⟨hal-03417501⟩



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