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Should car manufacturers have paid the buggy whip manufacturers for putting them out of business too?






There are two ways to lower property values in any neighborhood:

1) By doing something that directly reduces the quality of life there (for example, by building a noisy factory or a high riser).

2) By building an even better neighborhood in a nearby area which will compete with the old one.

I think your analogy describes the second way.
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melian
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Putting buggy whip manufacturers out of business just altered the market instead of directly harming anyone. It helped the people who would have bought them as much as it hurt them, so the net externalities are zero.

If you make the neighborhood ugly and drive down property values for that reason, you are creating a negative externality that you should pay for. If you're just giving them competition, that's different.
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DanielLC
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