Chapter 9 Property rights
In this concluding chapter, we show how contracts and clear definitions of power and control further support efficient interactions of different industry stakeholders in the best societal interest. The concept of externalities, property rights and vertical integration are introduced, building upon among other things the theoretical foundations of welfare from Chapter 1.
9.1 Externalities
An externality is consequence of an action that influences the decisions of an individual or a firm indirectly, and not directly through a market and changes in prices. This means that in general, the market cannot solve the efficient allocation of the externality.
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