ABSTRACT
In this chapter the analysis shifts to the intra-authority scale to examine the distribution of services within local government units and administrative boundaries. Although, once again, a wide range of services are considered, they are linked by the common theoretical concept of externalities. Put simply, an externality is an unpriced effect. It may be a benefit received by those who do not pay for it or a loss incurred by someone who is not compensated (Margolis, 1968). If someone gains this is known as a benefit, utility or positive externality; conversely, if someone loses this is known as a disbenefit, disutility or negative externality. These external effects are also sometimes termed spillovers or third-party effects. Such unpriced effects can emerge in the spheres of both production and consumption. The positive externalities derived by industries agglommerating in large centres are of course one of the main reasons for the growth of cities during the Industrial Revolution. The classic example of a negative side effect in the sphere of production is the air pollution which may emerge from some industrial processes. Similar effects can emerge in the realm of consumption through the exhaust emissions of automobiles. Much of the political conflict in cities can be interpreted as disputes over the distribution of externality effects.
