Tài liệu Market failure and environmental economics

S = MC = MSC (Social marginal cost)
D = MB = MSB (Social marginal benefit)
That is:


market supply properly takes account of all relevant costs
market demand properly takes account of all relevant benefits

And so the competitive market mechanism generates a maximisation of SOCIAL net benefits.

Also note that CONSUMER AND PRODUCER SURPLUSES (= SOCIAL SURPLUS) are maximised.

But market economies in practice do not satisfy the set of ideal conditions, and so privately optimal outcomes do NOT lead to socially optimal ones.