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The negative externality is the buggy whip manufacturers all lost their jobs which they probably weren't too happy about.

As long as all the direct stuff is agreed upon and you're only doing indirect things to shift the market, and everyone is rational and all that, the market will produce the ideal amount of everything. You don't need to worry about buggy whip manufacturers losing their jobs and working somewhere else for less pay, or all the people who can now afford workers, or the people who bought cars and consider them more valuable than the price they paid, etc.
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