Alex, you are correct. Of course the externality still exists.
Consider, husband and wife. Many externalities exist between the two.
The externalities never dissapear but bargaining brings the unit to the
Pareto frontier. Note that coming to the Pareto frontier does not even
stop arguments ov
Alex Robson wrote:
>I have been having a running argument with someone about externalities.
>My argument was that, even if Coasian bargaining were to take place, the
>externality doesn't go away - it still exists [in the sense that one
>person's action directly enters the utility function of the o
Armchairers,
I have been having a running argument with someone about externalities.
My argument was that, even if Coasian bargaining were to take place, the
externality doesn't go away - it still exists [in the sense that one
person's action directly enters the utility function of the other pers
