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They created a place where people who value the food can get it at a price less than the value they place on it. So, first, they created consumer surplus. That
by nanis 5y ago
They created a place where people who value the food can get it at a price less than the value they place on it. So, first, they created consumer surplus. That is real wealth creation. Second, we know that it cost them less to produce the pizza than the price they charge. That is, they created producer surplus. Both are wealth created when none existed before.
This is why free transactions in a market economy make everyone wealthier.
PS: Please spare me a lecture about externalities. Formally, an externality exists when Bob's preferences are decreasing in Alice's consumption. Since economics does not place any restrictions on preferences other than being complete, non-satiated, and convex, they are a possibility. But, a society in which everyone is able to veto anyone's consumption on the basis of some externality is a nightmare (e.g., can't allow other people to eat meat, can't allow other people to have children, can't allow other people to enjoy the sunshine etc).
- bruce511 5y agoUnfortunately some externalities are not frivolous. It is kinda nice not to have polluted water, or polluted air, or deserts because of bad land management. I'm not against your point of wealth creation, but externalities are real and do need to factor in. Individual veto isn't in play, but some sort of societally mandated rules-of-the-game are.
- suifbwish 5y agoThat may be true but someone has to pay to keep things like that. It’s a difficult position to claim that the people with wealth owe anyone else anything.
- nanis 5y ago> have polluted water, or polluted air There is no "pure" water or "pure" air. The "right" amount depends on costs and benefits ... None of that can be looked up anywhere and people end up bargaining over them indirectly.