Resource Misallocations, Externalities, and Environmentalism: A U.S.-Canadian Analysis

3 Pages Posted: 23 Jul 2011

See all articles by Walter E. Block

Walter E. Block

Loyola University New Orleans - Joseph A. Butt, S.J. College of Business

Date Written: July 21, 2011

Abstract

It is a truism among economists that only if the full costs and benefits of economic activity are taken into account by the entrepreneur, will resources be allocated in a Pareto Optimal manner. Under present economic conditions, however, some manufacturers are able to impose costs, particularly pollution or disposal costs, onto third parties. As a result, the actual social costs of such activities are greater than the recorded private costs. At present, the benefits of these goods need be equal to or greater than only the lower private costs, not the higher social costs, if the enterprise is to be able to at least break even and thus continue in operation. This being the case, it follows that the value of at least some of these presently produced goods and services will fall below the total or social costs, and should not be produced at all, if wealth is to be maximized.

Suggested Citation

Block, Walter E., Resource Misallocations, Externalities, and Environmentalism: A U.S.-Canadian Analysis (July 21, 2011). Available at SSRN: https://ssrn.com/abstract=1892375 or http://dx.doi.org/10.2139/ssrn.1892375

Walter E. Block (Contact Author)

Loyola University New Orleans - Joseph A. Butt, S.J. College of Business ( email )

6363 St. Charles Avenue
Box 15, Miller 321
New Orleans, LA 70118
United States
(504) 864-7944 (Phone)
(504) 864-7970 (Fax)

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