Abstract:Market failures lead to the deadweight (welfare) loss for the society. Assessment of the deadweight loss started with so called the Harberger Triangles, where Harberger offered a clear and persuasive derivation of the triangle method of analyzing the deadweight loss and applied the method to estimate deadweight losses due to income taxes in the United States. Harberger’s approach is based on the deviation of market equilibrium measured in terms of price and quantity. When analyzing the information asymmetry as… Show more
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