Market Failure and the Role of Government

Neutral externalities with no significant impact on non-students

Positive externalities through increased productivity and knowledge spread

Private benefits restricted solely to students and their families

Negative externalities from noise and traffic during school hours

Public Good

Tragedy of the Commons

Positive Externality

Negative Externality

Direct regulation stimulates innovation more effectively since every firm has individual limits dictating technological improvements required for compliance purposes across industries indiscriminately.

An ETS imposes stricter limitations on emissions leading all firms uniformly towards greener technology adoption regardless of cost differences among competitors.

Firms have flexibility in choosing whether to reduce emissions or purchase allowances from other firms based on their marginal abatement costs.

There is no significant difference between ETS and direct regulation as both policies essentially mandate emission reductions proportionate across all participating entities uniformly

Introducing cap-and-trade system where only large corporations are regulated

Implementing additional spending programs that focus solely on adaptation measures

Establishing national parks and preserves to sequester carbon through vegetation growth

Imposing carbon tax that accurately reflects the social cost of carbon emissions

Consumer surplus decreases, and producer surplus decreases.

Consumer surplus is unaffected, and producer surplus increases.

Consumer surplus increases, and producer surplus is unaffected.

Both consumer and producer surpluses increase.

Subsidize education so more people can attend school which would increase overall societal benefit.

Place price ceilings on tuition fees keeping post-secondary education affordable.

Issue vouchers specifically targeted towards low-income students facilitating access to schools.

Tax educational institutions less, encouraging them expand their offerings.

A positive externality; the market quantity is lower than the socially optimal quantity

A negative externality; the market quantity is higher than the socially optimal quantity

A public good; the market quantity is lower than the socially optimal quantity

A positive externality; the market quantity is higher than the socially optimal quantity

It encourages immediate investment in pollution control without affecting long-term resource use.

It increases demand for the goods produced by that industry as consumers compensate for higher prices.

It has no effect on resource allocation since taxes are always passed entirely onto consumers.

It reallocates resources away from pollution-intensive processes, incentivizing cleaner production methods.

By imposing import quotas on foreign goods that complement domestic products with positive externalities.

By providing direct subsidies to producers or consumers involved in these markets.

By instituting minimum wage laws that affect all sectors indiscriminately, including those generating positive externalities.

By strictly enforcing antitrust laws within these markets irrespective of external benefits provided by firms’ products or services.

Implementing Pigovian taxes equivalent to marginal external cost at each level of output.

Introducing subsidies equivalent to average total cost for every unit produced.

Applying strict quotas on total output regardless of individual firm behavior or marginal costs involved.

Setting up government-sponsored advertising campaigns encouraging voluntary reduction in output levels by firms causing external costs.