Consumers sometimes make choices that impose greater external costs on those who do not make the same choice. This paper examines how the selectivity of negative externalities in such situations affects the competitive equilibrium and the desirability of an externality-reducing public policy. Selective negative externalities create network externalities, but outcomes may differ greatly from typ...

Investments in human capital are individual and collective choices carrying significant external effects. Educated parents friends accelerate our own accumulation. Skilled colleagues at work increase productivity. Sharing experiences with cultured people is gratifying by itself. We introduce externalities a stylized model à la Uzawa (1965) we find that growth can be no longer balanced the equil...

Theory predicts that in markets with increasing returns, the number of differentiated products – and resulting consumer satisfaction – grow in market size. We document this phenomenon across 246 US radio markets. By a mechanism that we term “preference externalities,” an increase in the size of the market brings forth additional products valued by others with similar tastes. But who benefits wh...

When individual petroleum-producing firms make their exploration and development investment timing decisions, positive information externalities and negative extraction externalities may lead them to interact strategically with their neighbors. If they do occur, strategic interactions in petroleum production would lead to a loss in both firm profit and government royalty revenue. The possibilit...