Public Goods and Externalities
An investigation into market failure caused by public goods and externalities. Students will analyse how the free rider problem and divergence between private and social costs lead to allocative inefficiency.
About This Topic
An investigation into market failure caused by public goods and externalities. Students will analyse how the free rider problem and divergence between private and social costs lead to allocative inefficiency.
Key Questions
- Why will the free market fail to provide public goods?
- How do negative externalities lead to overproduction of a good?
- What is the deadweight loss associated with positive externalities?
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