Comment by ivjw
21 days ago
How is the environment, which is directly of concern to the primary economic sector, and to the entire economic enterprise in the long run, an externality?
21 days ago
How is the environment, which is directly of concern to the primary economic sector, and to the entire economic enterprise in the long run, an externality?
It’s actually the classic textbook example.
https://www.investopedia.com/terms/e/externality.asp
Unless you are studying an a priori science, textbook examples are pedagogical simplifications. Yes, the cost of environmental pollution is paid neither by factories nor their customers, yet both suffer the consequences, and as such are not "uninvolved" with the third party, as the definition goes.
Your point being?
I think everyone understands that there are higher-order consequences of externalities, which affect many (if not all) actors. That's why people are interested in the question of whether they are priced efficiently in markets, and it's why people are interested in ways to improve the pricing of externalities.
The question is not whether they are priced at all, the question is whether they are efficiently priced.