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Barkley. I made two points.
1. Because of income effects it is impossible in most cases to exactly
compensate for externalities. Since you did not comment on this I assume
you agree.
2. Externalities are rarely zero. This is a more contentious claim and
would require a longer defence. It is a claim that consumption is social
in nature, not individual. It does not rest upon a general or abstract
view that "everything is connected" but on concrete connections that can
be shown to exist. It the case of eating, it is commonplace that diet
affects health, attitude, mood, etc. These will affect human
interactions, and thus the utility of others.
Rod Hay
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