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Brian Eggleston's message sent me to Andreas Papandreou's EXTERNALITY AND
INSTITUTIONS (Clarendon, 1994). He notes (p. 22) that Oskar Lange (1936)
offered a "broadened scope for externality" in discussing "external
economies with centrally administered economic systems." Whether or not
he used the term "externality" or "externalities" awaits further
checking. Papandreou also mentions Sidgwick's (1883) discussion of timber
companies affecting "atmosphere through deforestation." Mark Blaug's
entry on Sidgwick (in GREAT ECONOMISTS BEFORE KEYNES, CUP, 1986) says
that he (Sidgwick) brought a "recognition of externalities in production
(the famous example of the lighthouse) as a source of 'market failure'."
But whether or not Henry used "externality" awaits someone with access
to the text. I stand by Francis Bator (1957) for the first published
use of the term "externality."
Dan Bromley
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