Plain Sense Economics

Prediction markets represent a fascinating development on the Internet. They’re a live, real-world example of the power of markets. True confession…I understand the basics of these markets, but there is much more for me to learn about them. Still I thought it important to introduce them here. Plus – there are some particularly relevant predictions [...]

In my earlier post on Externalities I mentioned that one form of government intervention to correct a negative externality is a Pigovian tax. Named after the English economist A.C. Pigou (pee-GOO), this tax attempts to bring outside, social costs into the decision that a seller makes in a market.
“…come again?…” Here’s what I mean…. [...]

Somewhat to my chagrin I discovered that I hadn’t posted on externalities – which is an economic concept important to understanding public policy options. So on with it…
In a nice, idealized market place the buyers and sellers come together at a price point where the private benefits of the purchase to the buyer equal the [...]