External Diseconomies in Consumption and Monopoly Pricing: A Comment

IN THEIR INTERESTING PAPER, "External Diseconomies in Consumption and Monopoly Pricing" [3], I. Luski and R. Lusky (LL) have presented a result concerning the respective value of the monopoly price and the socially optimal price of a private good, the consumption of which inflicts external diseconomies. But their presentation is incomplete because they consider a model with only one good freely available, forget to take into account the distribution of income, and limit the proof of the main theorem to a special case. These deficiencies make appreciation of the validity of the result difficult. We shall discuss here the same problem in the framework of the simplest consistent model.