So the Undercover Economist's family moves to Hackney, London --of all places. From there he discussed the problem of externality --a cost or a benefit that affects bystanders, he said-- in Financial Times (link might be non-permanent), or in his own website under the title Friend Chicken versus Fresh Air.
He went to say that negative externalities of living in a London neighbourhood, such as Hackney, are coming from stuffs like "..pub with late licences; takeaway food; garages; tyre shops; massage parlours; and betting shops..." --man, except those last two, for me, they're positive!--
But, unlike what the standard textbook suggests to overcome this problem --you know, taxation or bargaining--; he argues that "..Taxation is too clumsy, especially when wielded by unresponsive local governments. Bargaining is fine in the textbooks but unappealing in reality..."
Bad news? No. Let the bads be there since the positive externalities of living in London, and in any other big city, would outdo them. And "...it turns out that people flock to London not to seek their fortune but to enjoy the things that money cannot buy..."
The things that money cannot buy: plays, museums, bloomsbury, park, culture (incl. snobbishness) and etc, etc, etc....well, right!
p/s: By the way, manager, can I request the standard "In a sentimental mood", this time by Bill Evans?