The removal of controls imposed by governments on the operation of markets, aiming to enhance efficiency and competition but potentially contributing to economic instability under certain conditions.
Economic inefficiency refers to the misallocation of society's resources, where a different distribution can improve the well-being of some without reducing the well-being of others.
External diseconomies refer to the adverse effects on third parties outside a transaction, which are not reflected in supply and demand, leading to inefficient resource allocation.
Externalities are costs or benefits that affect third parties who did not choose to incur those costs or benefits, often a consideration in economics and public policy.
In economics, an externality represents a cost or benefit incurred by an economic agent that is not reflected through financial transactions. They can be positive or negative and can affect both individuals and businesses, with common examples including environmental pollution and increased local prosperity.
An imperfect market is a market structure where individual producers and/or consumers have the power to influence the prices and quantities of goods and services. Unlike in a perfectly competitive market, where no participant can affect the market outcome, imperfect markets are characterized by various market failures such as monopolies, oligopolies, and other forms of market power.
Market failure occurs when the equalization of supply and demand fails to produce an efficient allocation of resources from a social viewpoint. Causes for market failure include external economies, incomplete or poorly enforced property rights, and monopolistic characteristics of suppliers.
Spillover refers to the effects of economic activity or processes on individuals or groups who are not directly involved in the activity. These can be either positive or negative, impacting those who live or work nearby.
