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There is an important conceptual distinction between a demerit good and a negative externality. A negative externality occurs when the consumption of a good has measurable negative consequences on others who do not consume the good themselves. [5] Pollution (due, for example, to automobile use) is the canonical example of a negative externality.
The production of anti-rival goods typically benefits from network effects.Leung (2006) [2] quotes from Weber (2004), "Under conditions of anti-rivalness, as the size of the Internet-connected group increases, and there is a heterogeneous distribution of motivations with people who have a high level of interest and some resources to invest, then the large group is more likely, all things being ...
This is because potential producers will not be able to realize a profit (since the good can be obtained for free) sufficient to justify the costs of production. In this way the provision of non-excludable goods is a classic example of a positive externality which leads to inefficiency. In extreme cases this can result in the good not being ...
With this definition, a merit good is defined as a good that is better for a person than the person who may consume the good realises. [ 3 ] Other possible rationales for treating some commodities as merit (or demerit) goods include public-goods aspects of a commodity, imposing community standards (prostitution, drugs, etc.), immaturity or ...
In economics, inferior goods are those goods the demand for which falls with increase in income of the consumer. So, there is an inverse relationship between income of the consumer and the demand for inferior goods. [1] There are many examples of inferior goods, including cheap cars, public transit options, payday lending, and
A good electric toothbrush doesn't have to cost an arm and a leg, especially when it's on sale for the same price it was on Black Friday. This one from Oral-B is rechargeable, making it a great ...
An example would be unregulated forests as there's limited resources available and therefore rivalrous, but anyone may access these resources. If non-rivalrous, it would be a public good (cannot be rivalrous, no matter how much it is used, for example, the ocean (outside of territorial borders)).
Sin taxes result in the illegal manufacture, smuggling and/or outright theft of the taxed products, sometimes for personal use but often for sale on the black market. [16] [17] Critics of sin tax argue that it is a regressive tax in nature and discriminates against the lower classes. Sin taxes are often assessed at a flat rate meaning they ...