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Externalities are one form. They are the source of imperfections in markets for scarce resources. Informational asymmetries are another source of imperfection.
by T_S_ 16y ago
Externalities are one form. They are the source of imperfections in markets for scarce resources. Informational asymmetries are another source of imperfection. I don't think taxes and subsidies can help remedy them. Regulation that promotes information sharing is the only remedy I know.
- khafra 16y agoIt can be considered a form of regulation, but Mechanism Design studies the creation of systems that incentivize transparent information sharing.