0 damage caused by a company's activities for which it does not pay, or something positive created by it for which it does not receive payment:
Governments, through laws and regulations, attempt to transfer the costs of externalities such as pollution back to the responsible parties.
As industrial production has fallen so have associated negative externalities, leading to reductions in air, water, soil, and noise pollution.
Also, research work on appropriate mechanisms for internalization of various externalities tends to focus on internalization design at an aggregate production level.
Adding externalities, or other realistic features of the natural capital aggregate, would presumptively complicate the system's dynamics.
However, it represents a more realistic scenario for providing correlated local and global environmental externalities from the local perspective.
Economically, they are the solutions of a problem for a global planner who wants to provide both global and local stock externalities efficiently.
Production of the externality, in turn, is influenced by wage employment opportunities downstream.
The impact ranges of environmental stock externalities can be either local or global and the dissipation rates of these stock externalities vary dramatically.
Our paper addresses the question of how the pension formula has to be adapted in order to incorporate the externalities in some sense of optimality.
