https://padlet.com/BISHumanities/3uwem59glhh4cnzo Honing you skills of discussion, evaluation and comparing using DDEE and CLASPPE en-us 2021-05-04 13:33:59 UTC 2021-05-04 15:36:28 UTC hello@padlet.com BISHumanities https://padlet.com/BISHumanities/3uwem59glhh4cnzo/wish/1489560152 2021-05-04 13:33:59 UTC https://padlet.com/BISHumanities/3uwem59glhh4cnzo/wish/1489560152 BISHumanities https://padlet.com/BISHumanities/3uwem59glhh4cnzo/wish/1489560154 Both merit and demerit goods pose externalities and with that market failure on the society – the market is productively or allocatively inefficient. In the case of merit and demerit goods, these two types of goods pose externalities on third parties not involved in the process. A merit good is one, which when consumed, provides external benefits and the good tends to be under-consumed, for example vaccinations. The marginal social benefit of taking a vaccine lies outside the marginal private benefit curve of having the shot, as the free rider problem may arise and  other consumers may not have to take the vaccine themselves due to herd immunity. A demerit good on the other hand releases negative externalities of consumption onto society and tends to be over-consumed, for example alcohol consumption. In this case, the marginal private benefit of consuming alcohol lies outside the marginal social benefit, as the consumer himself may enjoy drinking this beverage, however he poses a threat to society as there is a risk of drunk-driving, violence etc. In both cases, there is a market failure, which the government may choose to correct by intervention, as they want the market to be operating at market equilibrium. Examples of government intervention may include; rule and regulation imposition, taxation, or choice architecture. If a good is demerit, the government wants the supply of this to decrease or be limited, thus they may decide to proceed in direct regulation: limit producers from supplying, set an age limit or even ban this good. This however may lead to a rise of a parallel, black markets. Another way the government may decide to solve the issue of demerit goods is using advertising and moral persuasion by choice architecture analysis. The goal would be to decrease demand for these goods, however this may not be an effective way and there is a huge opportunity cost to the government. This however may be an effective way for merit goods, as the government could advertise the benefits of such goods and encourage higher consumption. Lastly, governments may decide to tax such good using direct or ad valorem taxation. In this case however, consumption for demerit goods may not be affected as they tend to be highly inelastic. Legislation and direct provision could be utilized for merit goods and substantially increase their consumption, by  providing the good or service free at point of delivery. In a more extreme case scenario, the government ay decide to make these good compulsory. A good example of such goods, which pose a highly positive externality benefit is education, health care or national defense. This once again poses a high opportunity cost on the government, as they no longer collect tax revenue from such goods if they are provided for free.]]> 2021-05-04 13:33:59 UTC https://padlet.com/BISHumanities/3uwem59glhh4cnzo/wish/1489560154 BISHumanities https://padlet.com/BISHumanities/3uwem59glhh4cnzo/wish/1489560156 2021-05-04 13:33:59 UTC https://padlet.com/BISHumanities/3uwem59glhh4cnzo/wish/1489560156 BISHumanities https://padlet.com/BISHumanities/3uwem59glhh4cnzo/wish/1489560159 2021-05-04 13:33:59 UTC https://padlet.com/BISHumanities/3uwem59glhh4cnzo/wish/1489560159 BISHumanities https://padlet.com/BISHumanities/3uwem59glhh4cnzo/wish/1489560160 2021-05-04 13:33:59 UTC https://padlet.com/BISHumanities/3uwem59glhh4cnzo/wish/1489560160 BISHumanities https://padlet.com/BISHumanities/3uwem59glhh4cnzo/wish/1489560163 2021-05-04 13:33:59 UTC https://padlet.com/BISHumanities/3uwem59glhh4cnzo/wish/1489560163 BISHumanities https://padlet.com/BISHumanities/3uwem59glhh4cnzo/wish/1489560165 2021-05-04 13:33:59 UTC https://padlet.com/BISHumanities/3uwem59glhh4cnzo/wish/1489560165 BISHumanities https://padlet.com/BISHumanities/3uwem59glhh4cnzo/wish/1489560167 2021-05-04 13:33:59 UTC https://padlet.com/BISHumanities/3uwem59glhh4cnzo/wish/1489560167 BISHumanities https://padlet.com/BISHumanities/3uwem59glhh4cnzo/wish/1489560171 2021-05-04 13:33:59 UTC https://padlet.com/BISHumanities/3uwem59glhh4cnzo/wish/1489560171 BISHumanities https://padlet.com/BISHumanities/3uwem59glhh4cnzo/wish/1489560173 2021-05-04 13:33:59 UTC https://padlet.com/BISHumanities/3uwem59glhh4cnzo/wish/1489560173