Alternative Solutions for the Control of Production Externality in a General Equilibrium Model

Three recent contributions (Baumol, 1972; Negishi, 1972; Strotz and Wright, 1973) have re-established the classical or Pigou-Meade position on the control of production externalities in the face of some mistaken criticisms. Our object in this paper is to extend the model of Strotz and Wright in order (a) to make clearer than do Baumol or Negishi the consequences of alternative technological assumptions; (b) to specify behaviour so that the corrections themselves (not merely the first-order conditions) may be obtained; and (c) to investigate correction when other distortions exist in the economy. The first two are really preliminaries to the third. Strotz and Wright write at the conclusion of their paper

Control (management) · Economics · Externality · Keynesian economics · Management · Mathematical economics · Microeconomics · Neoclassical economics · Object (grammar) · Order (exchange) · Pigou effect · Position (finance) · Production (economics) · Wright · Computer Science · Economic theories and models · Economic Theory and Policy · Fiscal Policy and Economic Growth

• General Equilibrium Theory and International Trade

  Pranab Bardhan, Pranab K Bardhan et al.•The Economic Journal•1972

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• Ideal Output and the Interdependence of Firms

  Lionel W McKenzie•The Economic Journal•1951

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• Some Notes on Ideal Output

  R F Kahn•The Economic Journal•1935

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