Explains why the usual American solution to economic problems, the free market, is inadequate to either explain how the economy really works or solve its problems.

As a continuation of the overall introduction to the book, Chapter 2 summarizes the main contributions of economics to understanding the role of education in society and to educational policy. The chapter details these contributions in three parts: (1) economists have demonstrated that education has an important economic dimension (that it has economic value), and they have inserted education policy near the center of the debate on economic development and material well-being; (2) they have formalized concrete models of student learning, both in and out of school, and have developed models of educational production, in which schools, districts, and states are economic decision units, allocating resources to produce educational outputs – and where incentives and resource allocation decisions affect the productivity of teachers and student learning, economists have been able to model a number of strategies that increase output and test them empirically; and (3) economists have also been at the forefront of applying new and increasingly sophisticated statistical techniques to estimate quantitatively the causal effects of various educational policies on student academic outcomes and adult economic and social outcomes.

As scholars and activists seek to define and promote greater corporate political responsibility (CPR), they will benefit from understanding practitioner perspectives and how executives are responding to rising scrutiny of their political influences, reputational risk and pressure from employees, customers and investors to get involved in civic, political, and societal issues. This chapter draws on firsthand conversations with practitioners, including executives in government affairs; sustainability; senior leadership; and diversity, equity and inclusion, during the launch of a university-based CPR initiative. I summarize practitioner motivations, interests, barriers and challenges related to engaging in conversations about CPR, as well as committing or acting to improve CPR. Following the summary, I present implications for further research and several possible paths forward, including leveraging practitioners’ value on accountability, sustaining external calls for transparency, strengthening awareness of systems, and reframing CPR as part of a larger dialogue around society’s “social contract.”

Chapter 16 establishes the concept of an externality, a situation where a decision carries additional costs or benefits to a party not involved in the decision-making process. The chapter classifies several types of externalities and explores how and why they lead to undesirable outcomes. Then potential solutions to externalities as well as their strengths and weaknesses are discussed: subsidies, taxes, regulation, and the assignment of property rights. The chapter ends with a discussion of cost–benefit analysis and its role in evaluating interventions aimed at combatting externality problems.

This chapter summarises the lessons from Parts I to IV and concludes. First, we revisit the major drivers of FinTech: finance, technology, and regulation. Second, we examine how each of these drivers brings its own challenges, which one or two of the other domains have the potential to mitigate. Third, we show how the global discussion on how to regulate FinTech is indicative of a broader regulatory trend to expect more from the financial system than the mere efficient distribution of capital; and we argue how financial regulation which promotes resilience, financial inclusion, and expansion of financial resources is well equipped to further the overarching objective of sustainable development. Fourth, we analyse further how FinTech (and FinTech-oriented financial regulation) may be used to advance sustainable development. Fifth, we analyse the constituent building blocks of a comprehensive FinTech strategy.

Economic, technological, and demographic changes after World War II created new pressures on species, habitats, and human environments. Concerns about human impacts on the environment mounted. Rachel Carson, Charles Elton, Barry Commoner, and others articulated concerns about pesticides and other harmful substances in air and water, introduced species, escalating extinction rates, and the modification and fragmentation of habitats. Ecologists, economists, and philosophers like Paul Ehrlich, Garrett Hardin, John Kenneth Galbraith, Lynne White, Norman Myers, and Arne Naess attributed these problems to varied causes, including population growth, tragedies of the commons, excessive resource consumption and disparities in consumption, militarism, the misuse of science and technology, externalities, and anthropocentrism. In response to these developments and to increasing awareness of the limitations of utilitarian conservation, a preservationist approach to conservation that seeks to protect species and regardless of their economic value became prominent.

This chapter argues that many of the fundamental challenges of sharing economy platforms can best be understood and dealt with by considering these platforms embedded in a sociotechnical ecosystem. This perspective also enables us to formulate many crucial questions about the design, governance, and regulation of sharing economy platforms. The chapter also provides a set of differentiating dimensions that can help with classifying various sharing economy platforms, guide decisions regarding ecosystem boundaries, and shape more relevant sociotechnical questions and hypotheses for a given sharing economy. Finally, the chapter provides a few examples of ecosystem-motivated issues and questions that include a broader consideration of socioeconomic externalities, decisions about modes of platform governance and the relative weight of internal versus external regulations, and public–private partnerships.

The sharing economy is transformative in that it decentralizes services by permitting direct transactions between individuals. A less recognized consequence is that it also decentralizes the geography of services, shifting their distribution away from major business districts and into residential communities. We present a three-part generalized theory for studying and developing policy responses to the arrival of these services in neighborhoods where they were not previously available. First, one must quantify the distribution of the new services across neighborhoods. Second, these geographic shifts in supply and demand can generate positive and negative externalities for communities, which might be hypothesized and tested for empirically. Third, policy responses can be developed based on the knowledge generated by components 1 and 2. We illustrate this proposed theory by examining the incursion of Airbnb short-term rentals into the neighborhoods of Boston, MA for 2010 to 2018. We demonstrate that Airbnb listings quickly grew into neighborhoods away from the downtown core where hotels are concentrated and hypothesize how this might increase investment in local buildings (measured through building permits), activity at local food establishments (measured through the number of new licenses), and crime (measured through 911 reports). We find initial evidence for increased investment through building permits and limited evidence for increased violent crime, but no evidence for increases in food establishments. This can then guide how cities regulate short-term rentals to maximize benefits and minimize negative impacts. We conclude by exploring how the theory might be applied to other forms of the sharing economy.

The social foundations of the environmental strategy framework lie in Coaisan exchanges between companies and their stakeholders to reduce companies’ environmental impacts. A company’s environmental impacts are negative externalities in that they have consequences borne by those who did not choose to incur them. A Coasian exchange occurs when stakeholders compensate companies to reduce their production of negative externalities, resulting in outcomes that benefits the company and its stakeholders. The obstacles to Coasian exchanges are (1) search and screening costs to identify environmental improvements and stakeholders; (2) bargaining and transfer costs to negotiate terms and exchange resources; and (3) monitoring and enforcement costs to ensure both sides of the exchange uphold their obligations in the exchange. The goal of environmental strategy is to identify and mitigate these obstacles so that companies can implement environmental improvements that create value across the triple bottom line.

In the traditional economic model, people have well-defined preferences and pursue them consistently and selfishly. According to this model wellbeing is efficiently promoted by the free market except for various problems, the biggest of which is ’externality’. This is the way in which people affect other people without their agreement.

However there are in fact many other problems. People often lack self-control (e.g., over drugs, alcohol, and gambling). They often do not realise how much they will adapt to change, and they put effort into new acquisitions which make less difference to them than they expect. They are hugely affected by how decisions are framed. People are hugely loss-averse which often makes desirable changes much more difficult. And, on the other side, they often help each other without expecting anything in return.

These complexities mean that government intervention or nudges are often needed to produce efficient outcomes. These arguments become even stronger when we consider the many pervasive ’externalities’ affecting our experience: We benefit if we live in a trustworthy society; we get many of our norms and tastes from society; because of rivalry we lose wellbeing if others are more successful.

From an economic point of view, the substantive law is a mechanism to generate incentives towards efficient behaviour, i.e. behaviour that maximizes the social surplus. The same applies to the legal rules that the parties agree in the contracts they make. The behavioural response that legal rules aim for depends on accurate enforcement. Litigation, arbitration and other mechanisms of dispute settlement must be viewed and evaluated as tools for the accurate enforcement of legal rules. This contribution analyzes arbitration as an efficient enforcement mechanism that may be used by the parties to maximize the surplus they jointly reap from their transactions. The paper addresses the decision to be made by the parties in choosing arbitration over litigation and other tools of ADR, but also the choice between institutional and ad hoc arbitration. As it turns out, the parameters that influence these choices differ, depending on the domestic or international nature of the given transaction. However, the economics of arbitration are not only about the choices to be made by the parties. Thus, the paper also looks at the incentives faced by the arbitrators.

Giving people a great deal of freedom over how they live their lives, in and of itself, lends much scope for the egoistically inclined to act upon their instincts and to seek advantage at the expense of others. One way in which they might do this is by using the findings of behavioural science in order to manipulate others in an exchange relationship. In such circumstances, harms – or negative externalities – will be imposed upon the manipulated. I argue in this chapter that where people or organisations use the behavioural influences to further their aims, or indeed where the behavioural influences cause others to forgo what could be easily won benefits, there exists an intellectual justification for behavioural-informed regulation – or, in other words, for budge interventions. In this chapter, I further discuss some of the relevant trade-offs that must be considered when deciding whether or not to regulate, and outline the parameters of the budge framework with a few illustrative examples.

The plaintiff, John Walkovsky, was struck by a taxi owned by Seon Cab Corporation while walking in New York City. Seon Cab Corp. was one of the ten cab companies owned by a group of shareholders, including William Carlton. The case highlights the harms visited on innocent parties by limited liability and shareholders’ focus on profit. A feminist rewrite would examine the costs visited upon vulnerable groups such as tort victims with limited access to the legal system, children who are likely to be more severely injured if harmed by corporate activity or by the loss of a parent so injured, and immigrants and lower-income Americans who may not have health insurance to cover the physical harms caused by corporate business. Intentional undercapitalization of corporations and an adherence to minimum insurance requirements externalizes the costs of doing business onto the rest of society. This externalization of costs is particularly harmful when it causes physical injury or death to portions of the population who cannot absorb the costs ducked by the corporation. A feminist perspective could consider the interests of these vulnerable populations in designing a limited liability doctrine that encourages entrepreneurial risk-taking while balancing it against the cost of significant corporate externalities.