A natural result of the economist's participation in externality literature has been a strong emphasis upon market and price‐guided policies. Available theoretical foundations are insufficient for supporting this ideology. Absent is a conceptual framework which integrates institutional options and their attendant resource costs with what we know of resource and technology constraints. This paper addresses this omission by incorporating an explicit role for transaction costs into traditional welfare diagrammatics.
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Ronald C. Griffin (1991) studied this question.
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