ABSTRACT
A long-running theme in economics is how individuals or organizations following their own interests result in benefits or costs to others (Brueckner, 2003, Lo´pez-Bazo, Vaya´, and Arts 2004, Ertur and Koch, 2007). These benefits or costs are labeled externalities and often termed spillovers in a spatial setting. A technological innovation provides an example of a positive externality or spillover while pollution provides an example of a negative externality or spillover. Although both innovation and pollution have global impacts, these often result in more geographically concentrated impacts (e.g., the computer industry in Silicon Valley, the Exxon Valdez oil spill in Alaska).
