Political Science 1020E Lecture Notes - Lecture 12: Communism, Pareto Efficiency, Market Failure
18 Oct 2016
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Markets, by themselves, don"t always function efficiently. The cost or benefit of producing these goods is externalized. Cost nothing to the consumer, who would rather not have them (e. g. , pollution) It is cheaper to make others pay the costs. Goods with positive externalities cost nothing to the consumer, who wants them. Public goods: if provided, they benefit everyone (for example, street lights) Make it illegal (or more costly) to produce some goods with negative externalities. The state provides public goods and taxes citizens to pay for them. It determines what kind of life you will live. The original position (op), with its veil of ignorance, models equality of concern. People in the original position must be impartial. I can"t benefit myself at the expense of others. I don"t know my intelligence, economic class, talents, gender, sexual preference, race, social status. How to referee when you don"t know which team you want to win.
