when a market is incomplete or has incomplete information, how is the quantity demanded or supplied not Pareto efficient? how would the supply and demand change from say, a regular market?
How is taxing someone to correct a market failure bettering society in terms of the parretto optimum? Isn't that making one situation better wile making another one worse? Doesn't that contradict your first definition?
When someone is creating a negative externality (e.g., by creating pollution), they are imposing costs on others without reimbursing them for the harm done. Because the person does not bear the full cost of their actions, they will consume an amount higher than what is socially optimal. You are correct that taxing this person makes them worse off, but the gains to society exceed the loss to the person being taxed (when there is a negative externality).
It is possible to tax someone which makes them better off and society better too. When the person uses the money to support self destructive acts which are harmful to society as well. Taxes go to rehab program. The person reduces drug consumption (because of less cash) then checks into the rehab. He doesn't rob cheat and steal to get drug money anymore because his addiction has been effectively addressed. This is a real possiblity, but of course not guaranteed.
@@Edspira Problem with this. It assumes no negative consequences for the polluter from the pollution which he himself causes. He may well pollute his own air and his own water and his own land.
Maybe, but not necessarily. A loss of money is not always a negative for the money loser. Alcoholic, illicit drug user, problem gambler may well be better off without the money.
after 100 videos, I finally found a good concise and easy to understand video
"I'm not going to be able to draw France." LOL!
Thank you, sir. what are the effects of market failure on prices, efficiency of market operation and economic welfare?
I really was able to understand what u said ❤ this video is the best
Thanks!
Thank you so so much
when a market is incomplete or has incomplete information, how is the quantity demanded or supplied not Pareto efficient? how would the supply and demand change from say, a regular market?
your definition is also hard to understand
How is taxing someone to correct a market failure bettering society in terms of the parretto optimum? Isn't that making one situation better wile making another one worse? Doesn't that contradict your first definition?
When someone is creating a negative externality (e.g., by creating pollution), they are imposing costs on others without reimbursing them for the harm done. Because the person does not bear the full cost of their actions, they will consume an amount higher than what is socially optimal. You are correct that taxing this person makes them worse off, but the gains to society exceed the loss to the person being taxed (when there is a negative externality).
It is possible to tax someone which makes them better off and society better too. When the person uses the money to support self destructive acts which are harmful to society as well. Taxes go to rehab program. The person reduces drug consumption (because of less cash) then checks into the rehab. He doesn't rob cheat and steal to get drug money anymore because his addiction has been effectively addressed. This is a real possiblity, but of course not guaranteed.
@@Edspira Problem with this. It assumes no negative consequences for the polluter from the pollution which he himself causes. He may well pollute his own air and his own water and his own land.
Maybe, but not necessarily. A loss of money is not always a negative for the money loser. Alcoholic, illicit drug user, problem gambler may well be better off without the money.
Some taxes also create market failures-- moral hazards, unintended consequences.