Public Choice

, Volume 14, Issue 1, pp 69–82 | Cite as

The institutional structure of externality

  • James M. Buchanan


Public Finance Institutional Structure 
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  1. 1.
    Economists' recognition of this tendency toward contractual internalization of potential externality in the small-number cases stems from the basic paper by R. H. Coase, “The Problem of Social Cost,”Journal of Law and Economics III (October 1960), 1–44.Google Scholar
  2. 2.
    For a representative example of a paper in this general area, see William J. Baumol, “On Taxation and Correction of Externalities,”American Economic Review LXII (June, 1972), 307–22.Google Scholar
  3. 3.
    See, for example, E. J. Mishan,The Costs of Economic Growth (New York: Praeger, 1967).Google Scholar
  4. 5.
    Although independently developed, the scheme presented here is related variously to several other arrangements which have been invented, and elaborated in considerably more detail, to accomplish the same objective. Among those that have been brought to my attention are: Edward H. Clarke, “Multipart Pricing of Public Goods,”Public Choice XI (Fall 1971), 17–34; T. Nicolaus Tideman, “The Efficient Provision of Public Goods” (unpublished manuscript, 1970); E. Malinvaud, “A Planning Approach to the Public Good Problem,”Swedish Journal of Economics, 73 (March 1971), 93–112; Peter Bohm, “An Approach to the Problem of Estimating Demands for Public Goods,”Swedish Journal of Economics, 73 (March 1971), 55–66. I should emphasize that my purpose here is not to advance a particular scheme or arrangement, and I am not interested in examining the operating characteristics in detail. My purpose is, instead, that of isolating theinstitutional setting that seems to be suggested for any approach to efficient outcomes.Google Scholar

Copyright information

© Center for Study of Public Choice Virginia Polytechnic Institute and State University 1973

Authors and Affiliations

  • James M. Buchanan
    • 1
  1. 1.Virginia Polytechnic Institute and State UniversityUSA

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