| Public goods |
inability |
Free rider problem |
Funded public goods → collective consumption |
| Merit goods |
important to well-being |
|
|
| • potential advantages |
|
|
|
| • information failure |
Underconsumption |
Subsidies |
|
| Demerit goods |
• information failure |
|
|
| • unaware of harm |
Overconsumption |
Taxes/ Minimum age |
|
| Imperfect information |
/ |
Poor choices |
Statutory (法定的) information |
| External benefits/ costs |
spillover effects |
Damage to third parties |
Laws/ Taxes |
| Factor immobility |
geographical/ occupational |
Structural unemployment |
Investment |
| Monopoly power |
lack of competition |
|
|
| • increase price |
|
|
|
| • reduce quality |
Allocative efficiency ↓ |
Competition policy/ encourage new firms |
|