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Dan Bromley is right that Bator had it in 1957, as well as 1958. 
 
Wakatabe's allusion to the fact that Samuelson's "Aspects of Public 
Expenditure Theories" was originally presented in 1955 (details of which 
are in a footnote in Samuelson's paper) is worth pursuing.  Unless there 
was some "stray" use of the term prior to the mid-to-late 1950s, it would 
seem that the term "externality" was coined then -- and perhaps 
(probably??) by either Samuelson or Bator, who were at MIT together. 
 
In terms of the general concept (as opposed to the explicit term), there 
is the whole "Empty Boxes" literature, Pigou's Economics of Welfare 
(which takes the matter beyond Marshall's cost analysis and into areas now 
more commonly associated with the term externality, and of course Knight's 
classic "Some Fallacies in the Interpretation of Social Cost."  In the 
nineteenth century, Sidwick and Mill both do a bit to develop the 
concept, and Sidgwick even has a "primitive" version of the Coase theorem 
idea. Malthus also brings out the notion of externalities in his 
population essay. 
 
Steve Medema 
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