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15 cards from this deck
Inefficient allocation leading to net social welfare loss
MSC=MPC+MECMSC = MPC + MECMSC=MPC+MEC (private cost + external cost)
Cost imposed on third parties from production/consumption
Additional cost to producer from producing one more unit
MSB=MPB+MEBMSB = MPB + MEBMSB=MPB+MEB (private benefit + external benefit)
Benefit to third parties from production/consumption
Additional benefit to consumer from consuming one more unit
Side effects on third parties not reflected in market prices
Non-excludable and non-rivalrous
Under-allocation; Q produced below socially optimal level
Over-allocation; Q produced above socially optimal level
Subsidies, public provision, or tax incentives
Taxes, regulations, or pollution permits
Benefits society via higher productivity & innovation
Imposes health & environmental costs on community
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