Externalities, Liberty, and the Role of the State


Different theories of externalities have different implications for the feasibility of individual liberty, the institutions necessary to further it, and the role of the state. Ever since Pigou, externalities have been the major explanation of market failure and a major justification for state intervention. But are all externalities relevant? What should be the role of the state?


Conference Readings

Hill, Peter Jensen and Roger E. Meiners, eds. Who Owns the Environment?, Lanham: Rowman & Littlefield, 1998.

Bator, Francis M. “The Simple Analytics of Welfare Maximization.” American Economic Review 47, no. 1 (March 1957): 22-44.

Buchanan, James and William Craig Stubblebine. “Externality.” Economica 29 (1962): 371-384.

Coase, Ronald. "The Problem of Social Cost." Journal of Law and Economics 3 (October 1960): 1-44.

David, D. Haddock. “Irrelevant Externality Angst.” Journal of Interdisciplinarty Economics 19, no. 1 (2007): 3-18.

de Jasay, Anthony. The State. Indianapolis: Liberty Fund, 1998.

Friedman, David D. Law's Order: What Economics Has to Do with Law and Why It Matters. Princeton: Princeton University Press, 2000.

Hayek, F. A. Individualism and Economic Order. Chicago: University of Chicago Press, 1948, 1980.

Nye, John V. C. “The Pigou Problem.” Regulation 31, no. 1 (Summer 2008): 32-37.

Pigou, A. C. The Economics of Welfare. London: Macmillan, 1920.

Samuelson, Paul A. “Diagrammatic Exposition of a Theory of Public Expenditure.” Review of Economics and Statistics 37 (1955): 350-356.

Sen, Amartya K. “The Impossibility of a Paretian Liberal.” Journal of Political Economy 78 (1970): 152-157.

Sugden, Robert. The Economics of Rights, Cooperation and Welfare. Oxford: Blackwell Publishing, 1986.