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Market failure (Governement intervention (Taxes, Subsidies, Legislation),…
Market failure
Governement intervention
Taxes
Subsidies
Legislation
Quasi-public goods
Roads
Beaches
Social cost
External cost+private cost
Social benefit
external benefit+private benefit
Public goods
Non-excludeable
Free riders
Tragedy of the commons
Commons:
Ocean
Fish
Atmosphere
Forests
Things that are not owned by a person or organisation
When a common thing is over consumed to the point that it is fully depleted
Externalities
Production externalities
Generated and received in production outside of the market
When social cost outways the private cost
Positive
The jobs provided within the economy as a whole
Negative
Factory pollution
Consumption externalities
Generated and received in consumption outside the market
When the social benefit outways the private benefits
Positive
For education there will be a more productive workforce
Negative
For alcohol and drug trafficking
Demerit goods
Over-consumption
External costs and benefits
Externalities
Consumption
Production
Spill over
Environmental damage
Information failure
Misinformation misleads people when consuming
State/ direct provision
Public goods
Monopoly
Private costs and benefits
Duopoly- sometimes
Misallocation of resources
Consumer surplus
Environmentally damaging
Merit goods
Inequality of distribution of wealth
Law of unintended consequences