Externalities, internalization and fluctuations

Hervé Crès, Christian Ghiglino, Mich Tvede

Research output: Contribution to journalArticlepeer-review


In this paper we introduce consumption externalities as developed by Arrow in overlapping-generations economies. We show how the internalization of externalities - through exchanges at markets for externalities - may give rise to new phenomena such as altered stability properties and fluctuations, even though it restores optimality.

Original languageEnglish (US)
Pages (from-to)465-477
Number of pages13
JournalInternational Economic Review
Issue number2
StatePublished - May 1997

ASJC Scopus subject areas

  • Economics and Econometrics


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