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- W3022175113 abstract "Publisher SummaryExternalities exist whenever the costs or benefits of an economic decision do not fall to the individual making that decision. When some of the benefits of a decision accrue to third parties, it is said that external benefits have been created. When costs are imposed on third parties, it is called an external cost. The free market breaks down when externalities are present. If an external benefit is produced, then social benefits exceed the private benefits on which market decisions are made. The market would produce little benefit-yielding item. When external costs are present, a different problem appears. Social costs exceed the private costs on which the production decisions are made. The market produces many external cost-producing items. Government policies can be chosen to correct market failures and increase social welfare. External benefits can be encouraged with the use of subsidies to increase consumption. External costs can be reduced through taxation, which discourages production. Government regulations are more effective in accomplishing this reduction in external costs. A public good is an item that is shared by all. Government subsidies and government production of public goods can be used to increase social welfare." @default.
- W3022175113 created "2020-05-13" @default.
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- W3022175113 date "1981-01-01" @default.
- W3022175113 modified "2023-09-27" @default.
- W3022175113 title "Market Failures: Externalities" @default.
- W3022175113 doi "https://doi.org/10.1016/b978-0-12-719540-7.50018-5" @default.
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