Assume that there are spillover benefits associated with keeping cars in good mechanical condition. Without government intervention (i.e., a free market), we would expect people to

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Spillover benefits, or positive externalities, occur when a third party benefits from a transaction they are not involved in. In this case, keeping cars in good mechanical condition benefits others (e.g., through reduced pollution, safer roads). Without government intervention, individuals may not consider these external benefits when deciding on maintenance, leading to less maintenance than is socially optimal.

Assume That There Are Spillover Benefits Associated with Keeping Cars