Divergence between Social and Private Costs/Benefits
A primary characteristic of situations involving external effects is the divergence between social and private costs or benefits. The social cost or benefit encompasses the total impact on society, whereas the private cost or benefit is what the individual decision-maker personally experiences. [1, 2, 3] This discrepancy leads to a misallocation of resources because decisions are made without factoring in the full societal impacts. [8, 10]
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Economics
CORE Econ
Introduction to Microeconomics Course
The Economy 2.0 Microeconomics @ CORE Econ
Ch.10 Market successes and failures: The societal effects of private decisions - The Economy 2.0 Microeconomics @ CORE Econ
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