Abstract: The process of arriving at a useful concept of analysis is not only slow and painful, but may also go astray and attain nothing useful. Someone begins with one example or observation, followed by a theory which is intuitively plausible. A theoretical term associated with a vague concept is coined. Examples of a seemingly different type emerge, which call for another theory. The process goes on. As examples and theories continue to accumulate, the different categories under the same heading of analysis serve only to confuse and each associated theory becomes ad hoc. Such has been the fate of the concept of ‘externality.’ (Cheung 1970).

* The authors are respectively Professor of Economics, American University of Sharjah and Emeritus Professor of Economics, Auburn University, and Professor of Economics Emeritus and Dean Emeritus, Clemson University.

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