Barking dogs cannot be considered an externality because externalities must be associated with some form of market exchange.

Question

Quizplus · Accepted Answer

Externalities are not limited to market exchanges; they refer to the costs or benefits that affect a party who did not choose to incur that cost or benefit. Barking dogs can be considered a negative externality as they may cause disturbance or discomfort to neighbors without any market transaction involved.

Barking Dogs Cannot Be Considered an Externality Because Externalities Must