On Internalization of Externalities

Anil K. Gupta and Aseem Prakash

IIMA Working Papers from Indian Institute of Management Ahmedabad, Research and Publication Department

Abstract: Externalities can be internalized through market mechanism, government regulation, or self-governing institutions or a mix of these institutions. We recommend the institutional route which minimizes total cost (sum of technology, management, and transaction costs) to the firm. These costs are influenced by the externality attributes (occurrence, polluter, spatial, time and technology). Different institutions may be appropriate for different stages and social contexts of an externality.

Date: 1993-08-01
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Persistent link: https://EconPapers.repec.org/RePEc:iim:iimawp:wp01202

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