Fichas
Market failure and government intervention - Definitions
Fichas del conjunto (29)
- 1Social benefits:The total benefits of a particular action.
- 2Tradable permit:A permit that allows the owner to emit a certain amount of pollution and that, if unused or only partially used, can be sold to another polluter.
- 3Subsidy:A payment, usually from government, to encourage production or consumption.
- 4Polluter pays principle:Any measure, such as a green tax, whereby the polluter pays explicitly for the pollution caused.
- 5Indirect tax:A tax levied on goods and services.
- 6Direct tax:One that taxes the income of people and firms and that cannot be avoided.
- 7Quasi-public goods:Goods having some but not all of the characteristics of a public good.
- 8Non-rivalry:Situation existing where consumption by one person does not affect the consumption of all others.
- 9Free rider:Someone who directly benefits from the consumption of a public good but who does not contribute towards its provision.
- 10Non-excludability:Situation existing where individual consumers cannot be excluded from consumption.
- 11Public goods:Goods that are collectively consumed and have the characteristics of non-excludability and non-rivalry.
- 12Demerit goods:Their consumption is more harmful than is actually realised.
- 13Merit goods:These have more private benefits than their consumers actually realise.
- 14Positive externality:This exists where the social benefit of an activity exceeds the private benefit.
- 15Negative externality:This exists where the social cost of an activity is greater than the private cost.
- 16Market failure:Where the free market mechanism fails to achieve economic efficiency.
- 17Social costs:The total costs of a particular action.
- 18External benefits:The benefits that accrue as a consequence of externalities to third parties.
- 19External costs:The costs that are the consequence of externalities to third parties.
- 20Private benefits:The benefits directly accruing to those taking a particular action.
- 21Private costs:The costs incurred by those taking a particular action.
- 22Third party:Those not directly involved in making a decision.
- 23Externality:An effect whereby those not directly involved in taking a decision are affected by the actions of others.
- 24Asymmetric information:Information not equally shared between two parties.
- 25Information failure:A lack of information resulting in consumers and producers making decisions that do not maximise welfare.
- 26Free market mechanism:The system by which the market forces of demand and supply determine prices and the decisions made by consumers and firms.
- 27Inefficiency:Any situation where economic efficiency is not achieved.
- 28Economic efficiency:Where both allocative and productive efficiency are achieved.
- 29Productive efficiency:Where production takes place using the least amount of scarce resources.