Abstract
External economies and diseconomies nowadays generally mean unpaid side effects of one producer’s output or inputs on other producers. External economies in this sense imply as a rule that market prices in a competitive market economy will not reflect marginal social costs of production, giving rise to a ‘market failure’. But, with technological external economies and diseconomies now most often replaced by the well-defined concept of externality, and with pecuniary external economies and diseconomies being synonymous with general market interdependence, external economies no longer have much of a role to play in economic analysis.
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Bohm, P. (2018). External Economies. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_266
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DOI: https://doi.org/10.1057/978-1-349-95189-5_266
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