Externality and Institutions [Paperback]

This is a concise and distinctive survey of externality theory. Externalities are the costs and benefits imposed when a decision such as that to build a new road is taken. The author both reviews the existing literature and provides a methodological guide for economists wishing to utilize the externality theory. The book affords an indispensable description of the ideas and issues behind the theory of externalities.

Introduction
1. A History of the Notion of Externality
2. Phenomenological Characterization
3. General Equilibrium Approach
4. Nonconvexity
5. Relevant Causality
6. The Sources of Many Meaning
7. Formation of Institutions and Efficiency
8. Wealth Maximization
9. Transaction Costs, Efficiency and Counterfactuals
Conclusion
Bibliography
Index

The reader interested in externality theory, institutional analysis, or public policy will profit from reading this book. The author's analysis of the complex notion of externality emphasizes anew the inherent dilemma with the neoclassical idea of economic inefficiency. --American Journal ofAgricultural Economics

Papandreou's efforts to clarify the various meanings given to the externality concept, and his emphasis throughout on the centrality of issues of institutions are of great value, and will be of significant aid to those seeking to further advance the discussion. --Journal of Economic Literature