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External Effects and Cost of Production

  • Rosina Moreno
  • Enrique López-Bazo
  • Esther Vayá
  • Manuel Artís
Part of the Advances in Spatial Science book series (ADVSPATIAL)

Abstract

Recent studies (Romer, 1986; Lucas, 1988) have stressed the importance of factors external to the firm in the production process. Such externalities are assumed to have a direct effect on the level of production or to enhance the productivity of traditional inputs. Broadly speaking, we can identify two types of externalities. First, inputs that are not explicitly taken into account in the firm’s decision-making process although they contribute to the production process (for instance, the availability of human capital, public capital or infrastructure, and social capital). We will refer to these external effects as “external inputs.” Second, externalities that are relevant outside the economies giving rise to the externality, regardless whether these economies are understood as the economy of a specific industry or a specific country or region. This type of externality has recently been considered theoretically in growth models dealing with open economies.

Keywords

Total Factor Productivity Spatial Dependence External Effect External Input Public Capital 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© Springer-Verlag Berlin Heidelberg 2004

Authors and Affiliations

  • Rosina Moreno
    • 1
  • Enrique López-Bazo
    • 1
  • Esther Vayá
    • 1
  • Manuel Artís
    • 1
  1. 1.University of BarcelonaSpain

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