Efficiency and Externalities in an Open-Ended Universe
The problem of externalities and efficiency is cited relentlessly in mainstream literature as the great rationale for government intervention. The Austrian School, however, rooted in an understanding of the competitive process, takes another approach: viewing these supposed problems as having market-based solutions.
In Efficiency and Externalities in an Open-Ended Universe, author Roy Cordato elucidates the Austrian view and expands it. He relies strongly on the work of Murray Rothbard and Israel Kirzner to address the modern arguments, showing that there is no standard by which we can judge efficiency apart from the market standard, and no way to adjudicate property rights apart from exchange relationships.
This is an important contribution to Austrian literature, the most thorough and extensive study on a topic that is generally treated as a blank check for government to run roughshod over market institutions.
No serious student of the market process can afford not to absorb the analytics and lessons of this book.
Auburn: Mises Institute, 2007. Originally published as Welfare Economics and Externalities (Kluwer, 1992)