Social externalities and economic analysis

Marc Fleurbaey, Ravi Kanbur and Brody Viney
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Brody Viney: World Bank Group

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Abstract: This paper considers and assesses the concept of social externalities through human interdependence, in relation to the economic analysis of externalities in the tradition of Pigou and Arrow, including the analysis of the commons. It argues that there are limits to economic analysis. Our proposal is to enlarge the perspective and start thinking about a broader framework in which can be attached the "externality" label and be scrutinized for the likely negative consequences that result from the divergence. A tentative and probably incomplete list of possible internalizing mechanisms includes: pricing and monetary incentives; altruism and solidarity; moral norms; reciprocity and mutual monitoring; centralized cooperative decision-making; and merger. There are clear reasons why the pricing mechanism is not appropriate in some cases. A more difficult question to answer is what factors determine which of the mechanisms is the appropriate one to rely on in a given sphere of relations and activities. The object of the paper is to encourage research and contributions from all the relevant disciplines of social sciences about the pervasive human interdependence that the notion of social externalities tries to capture.

Keywords: Externalities; Commons; Human Interdpendence; Social Externalities; InternalizingMechanisms; Ethical Principles (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-hpe
Note: View the original document on HAL open archive server: https://hal.science/hal-03426166v1
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Published in Social Research: An International Quarterly, 2021, 88 (1), pp.171-202. ⟨10.1353/sor.2021.0010⟩

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Related works:
Working Paper: Social externalities and economic analysis (2021)
Working Paper: Social Externalities and Economic Analysis (2020)
Working Paper: Social Externalities and Economic Analysis (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03426166

DOI: 10.1353/sor.2021.0010

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