I think the traditional view of the term “market externality” is (more or less) something which cannot be measured in the marketplace.
I think it’s hogwash — and I gave up on the idea that any market externalities might exist decades ago. In my opinion, anything (and everything) can be measured. How accurate and / or precise a measurement is — that is a separate issue. But we are exposed to ball park estimates every day — such as the idea that there might have been a Big Bang about 15 billion years ago.
If Putin will only trade natural resources for rubles — well, that is his prerogative. If someone refuses to trade in rubles — well, that is their prerogative. Markets are essentially exchanges (or trades) of some things for other things — whatever things. Yet if people refuse to trade in one thing or another, then the market’s liquidity can freeze up, thereby leading to market failure.
Let’s try to translate this phenomenon into natural languages. If I understand only one language and another person understands only another language, what chance is there of something resembling adequate communication to take place? Pretty much: nil. Artificial intelligence will not help — all AI is capable of is extracting tepid insights from shallow waters.
In general, I am leaning towards the insight that “market externality” ought to refer to the cases in which individuals exercise their own independence and free will to explore their own ideas and interests rather than limiting their behavior to a mere consumer orientation, thereby refusing to pay only parochial attention to the limited palette of offers in marketplaces. While there seems to have been a brief period in history where the antecedents of such ideas became momentarily available in a widespread fashion, these green sprouts were militarily crushed by capitalist interests who feared such threats to mass industrialization, propagated via mass media to mass audiences, thereby spreading beliefs in mass attention to massive forces and mob mentality (and mob rule).
In contrast, our own era’s green shoots are rising in an atmosphere of skepticism with respect to religions, propaganda campaigns and bullshit like that. These new green shoots are oriented towards exploring new ideas off the grid, in seceding from mass markets and marketing altogether. These new orientations are more focused on those frontiers which remain wild and free, and which are governed by nothing more than the forces of nature. These efforts and initiatives seek to escape the lethargic mass markets, to liberate themselves from the constraints of industries and governments alike. They are fed up to the gills with the evil pollution propagated via advertising. They no longer hunger for a free lunch. Instead, they are willing to risk going where no market has gone before.
Socio Business blog 