External Economies and Diseconomies in a Competitive Situation: una nota

The article written by James E. Meade in 1952 is quoted in most works regarding externalities. The author classifies the externalities in two types: unpaid factors and creation of atmosphere. In this note we will show that unpaid factors and creation of atmosphere can be treated as particular cases of a single model, associated to different elasticity conditions. Moreover we will argue that the distinction is not relevant for the economic analysis. We regard the issue as important because the Meade’s example about the externalities existing between a bee-keeper and an apple-grower amounts to an application of the so called "Coase theorem". Meade was among the first scholars to show that non-pecuniary externalities are interdependencies out of the general equilibrium framework. In our view, this should have pushed towards the analysis of alternative mechanisms of co-ordination between agents and through time, instead of an impossible search of consistency with the general equilibrium framework.