In markets with externalities or public goods, the private costs and benefits that decision makers face are the same as the social costs and benefits.

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In markets with externalities or public goods, there are significant differences between private costs and benefits and social costs and benefits. Private decision makers do not take into account the full social costs or benefits of their actions, leading to inefficient outcomes. This is why government intervention is often necessary in such markets. In markets with externalities or public goods, there is a divergence between private costs and benefits and social costs and benefits. Private decision makers do not take into account the full costs or benefits of their actions on society as a whole, leading to market failures.

In Markets with Externalities or Public Goods, the Private Costs