Negative externalities, anyone?

A lot of my own research is about productivity, transforming inputs into outputs. Delve into this literature, and you may find some strange words (well, more than just 'some', really). Things like 'netputs' or 'badputs'. Things that would be considered 'negative externalities': the stuff that is also produced as inputs are transformed into outputs, destroying (often) someone else's value, rather than adding (to the company's) value. It's an intriguing concept, and at the core of why we impose some minimum amount of regulation on firms. But it is also hard to grasp. So, some examples (that, frankly, are not so hard to grasp) here.

Dec 24, 2011