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Understanding economic data: Tax revenue in the UK

Externalities and market failures

Lory Barile discusses externalities, public goods and the tragedy of the commons

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externalities, market failure, public goods

Economics is concerned with the allocation of scarce resources. Almost all decisions taken by economic agents (including individuals, firms and governments) involve value judgements being made on resource allocation. However, one important question is whether resources are allocated efficiently — that is, whether markets achieve allocative efficiency. An efficient allocation of resources occurs when it’s impossible to make someone better off without making someone else worse off.

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Understanding economic data: Tax revenue in the UK

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