Technical Externality in the Context of Altruism

摘要

An externality is one of the market failures where selfish behaviours of economic agencies do not yield the Pareto optimal market equilibrium. There are two kinds of externalities: pecuniary externalities advocated by Alfred Marshall and technical externalities advocated by Arthur Pigou that are further classified into positive and negative technical externalities. The above is the current common perception of externalities and holds as long as we assume the selfish behaviour of economic agencies.