Pecuniary and Technological Externality, Factor Rents, and Social Costs.

All external effects are found in principle to be reducible by correct input pricing to economies or diseconomies. This holds for separable and nonseparable externalities in production and for externalities viewed either in terms of specific firms or among industries. Different industry structures produce optimal allocation either for technological or for pecuniary externalities if the externalities are internal to an industry and the firms therein use the same factor proportions. When these conditions do not hold, only competitive structures and pecuniary externalities suffice to produce an optimum in the absence of very complicated combinations of taxes and subsidies which require a wealth of accurate detailed data utilized with consummate insight and speed. [ABSTRACT FROM AUTHOR]