Flashcards : Welfare Economics and Market Efficiency — 18 cartes

Distribution of resources via supply and demand.

Corrects failures and influences initial resource distribution.

An allocation where no one can be better off without worse off.

Market equilibrium is Pareto-efficient under ideal conditions.

Any Pareto-efficient allocation can be achieved via redistribution.

No further improvements without harming someone.

Prices that clear all markets, with supply equals demand.

Market equilibrium and Pareto efficiency under certain assumptions.

Violations of welfare theorem assumptions like externalities or info gaps.

Costs or benefits not reflected in market prices.

Non-excludable and non-rivalrous, often underprovided by markets.

Internalizes negative externalities to improve efficiency.

Private negotiations can resolve externalities if transaction costs are low.

Leads to market failures like adverse selection and moral hazard.

Single firm can supply efficiently due to economies of scale.

Inefficient outcomes requiring potential government intervention.

Optimal resource allocation and social welfare evaluation.

Making someone better off without hurting others.