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Economics 1.3.1 - Coggle Diagram
Economics 1.3.1
lack of public goods
non exlcudable
non rivalrous
it is unprofitable for a firm to produce them at the price level
street lighting, defence and policing
easy to gain benefits from the good without having to pay for it
free riders
externalities
unintended consequences of a transaction affecting a third party who is not part of the transaction
positive
price is set too high
under consumed
negative
price is set too low
over consumed
no compensation
property rights
regulation
overuse of land
individuals aim to maximise own utility
tragedy of the commons
information gaps
asymmetric information
moral hazard
adverse selection
market failure
inefficient allocation of resources leading to surpluses or shortages
partial market failure
not at socially optimum level
markets may not exist at all
complete market failure