Externalities: When Is A Potato Chip Not Just A Potato Chip?

Find LearnLiberty on Facebook: http://on.fb.me/VLLCWpIf Art sells potato chips to Betty, both Art and Betty are happy with the transaction. Betty has chips, and Art has been paid for them. If Betty eats her chips loudly and it irritates Carl, then Carl bears a cost because of Art and Betty's transaction. Carl didn't have anything to do with the sale of the chips, but now he has to listen to them crunching. The cost Carl bears is called an externality. It is a cost that affects someone outside of the transaction. Prof. Michael Munger explains how externalities can arise and some options for resolving them.Find LearnLiberty on...Twitter: http://bit.ly/RBl3WvFacebook: http://on.fb.me/X9qijGOur Website: http://bit.ly/RBl3FHLearn More!Dilbert tries to internalize the cost of a coworker's externalities: http://bit.ly/STjPZvA textbook introduction to Coasian bargaining: http://bit.ly/URbYIeArticle in The Freeman explains how common law can solve externalities: http://bit.ly/T7rHTTA Property and Environmental Research Center piece on Coase and Pigou: http://bit.ly/T7rKPyAn ethics blogger's argument in favor of Pigovian taxes: http://bit.ly/UE6IqK