How Do Production Externalities Cause Market Failure?
Автор: Learn About Economics
Загружено: 2026-01-23
Просмотров: 4
Описание:
Ever wondered how the production of everyday items can negatively impact people not directly involved in the transaction, or incur costs not reflected in the price? This video dives into how these 'hidden' effects, known as production externalities, lead to significant market failures.
In this video, you'll discover:
► How production externalities occur when third parties bear costs or receive benefits from a transaction they're not part of.
► The critical disconnect between private and social costs (or benefits) that leads to inefficient resource allocation.
► Real-world examples, such as factory pollution creating social costs or R&D generating social benefits, and their market impact.
► The concept of deadweight loss and how externalities prevent markets from reaching socially optimal outcomes.
► How government interventions, like Pigovian taxes or subsidies, can help internalize these externalities and correct market failures.
#MarketFailure, #Externalities, #EconomicsExplained, #Microeconomics, #EconomicPolicy
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