+- Twitist Forums (http://twitist.com)
+-- Forum: General Social Media & Marketing Forums (/forum-8.html)
+--- Forum: Social Marketing (/forum-10.html)
+--- Thread: why market outcome are ineffeciant in the presence of externalities? (/thread-124819.html)
why market outcome are ineffeciant in the presence of externalities? - nurachina - 04-04-2014 08:06 PM
why market outcome are ineffeciant in the presence of externalities
- ttoommaa - 04-04-2014 08:10 PM
You have to think about two types of costs/benifits - private and social. For example, private cost of pollution might be relatively low - the polluter doesn't want to pay for cleaning air or water - but social cost is rather high. Opposite example: it's very expensive for me to have fireworks, but I can't exclude other people from enjoying the fireworks for free. Thus, efficient quantity does not equal efficient cost in presence of externalities. It's easy for a government to provide too much or too little of a sertain good, because true market cost is hard to estimate.
I hope this makes sense.
- jal - 04-04-2014 08:23 PM
could you be more clear pls.. pls add more details, and i ll b able to help you..
thank you
- nostrategyguy - 04-04-2014 08:30 PM
Social marginal cost > social marginal benefit