Many cases of externalities in agricultural production such as pesticide drift, cross-pollination, and offensive odors are attributable to the incompatibility of neighboring land uses. This paper offers an examination of when an efficient activity arrangement is compatible with free-market incentives. Also, free-market and socially efficient activity arrangements are characterized in terms of spatial concentration of the externality generating uses.
Saak, Alexander E., "Spatial Arrangements of Externality Generating and Receiving Activities" (2003). CARD Working Papers. 363.