Political Science 1020E Lecture Notes - Lecture 2: Externality, Pareto Efficiency, Market Failure
8 Dec 2016
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Justice: each person getting what is due to them. He thought that society is not the thing that can be just or unjust: actions, intentions agency. Social justice is a mirage according to hayek. Why redistributing wealth in the name of social justice would be wrong anyway: liberty, efficiency. A pure capitalist free market: private property tights, production for profit, Hayek on market efficiency: markets convey information; prices signal shortage and surplus, profits provide incentives to produce, and want-satisfaction and pareto improvement. Market failure: markets, by themselves, don"t always function efficiently. Some goods have externalities, which means that the cost of producing these goods is externalized. Negative externalities: cost nothing to consumer, who would rather not have the, example pollution. Positive externalities: good with positive externalities cost nothing to consumer, who wants them. An example would be public goods, if provided they would benefit all, for example streetlights.
