ECO 304K Chapter Notes -Price Floor, Blue Triangle, Gunless
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ECO 304K Full Course Notes
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Not always self-centered but sometimes; fame, power, reputation, sex, and love are all important incentives. Benevolence too responds; anonymous hall (when people give money to charities) Good institutions align self-interest with the social interest. Bad when a firm has a great incentive to emit pollution; when fisherman have a great incentive to drive the stock of fish into collapse. Testing takes time so more testing means that good drugs are delayed, just like bad drugs. So the longer it takes to bring new drugs to market the more people are harmed who could have benefited. You can die because an unsafe drug is approved but you can also die if a drug has not yet been approved. And the greater the costs of testing, the fewer new drugs there will be. Drug loss if a safe drug is never developed. So more testing means drugs are safer but also means drug lag and loss.