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@anthonii.x5 жыл бұрын
Can there be deadweight loss even if the government doesn't intervene and is this an unavoidable thing?
@professorryan53225 жыл бұрын
The overall question of deadweight loss is market efficiency. If the suppliers and demanders are left alone (uninhibited and not coerced) so that they can make their own decisions about ability and willingness to sell and buy, then the market will be efficient and there will be no deadweight loss. As soon as any power or authority (government , criminal, or otherwise) intervenes to limit the freedom of buyers and sellers to negotiate the market price and quantity, there will be a deadweight loss UNLESS the intervening power just happens to force a price that is equal to the price that the buyers and sellers would have agreed on anyways. So, to answer your question, yes, there can be deadweight loss if a DIFFERENT party of power that is not government intervenes in the market. But without any intervention by a third party there will be no deadweight loss. FURTHERMORE, this also assumes that we are ignoring the effects of different market structures. For example, as soon as we start introducing the differences among monopoly, oligopoly, monopolistic competition, and perfect competition (not to mention the other more specialized market structures like monopsony), we introduce additional hindrances to market efficiency. Only perfect competition (a mostly-theoretical market structure) is fully efficient. The other market structures typically result in deadweight loss that is not coming directly from the government. In a practical sense, a market will provide its best service to society (not that this is the goal) when any party that is not a buyer or seller in the market leaves the market alone and when the buyers and sellers do not exert additional power to threaten the other side to agree on a more beneficial price for the power party. In that case, the market will be as efficient as it can be and there will be negligible deadweight loss, if any. So, in a practical sense, it is "unavoidable" because there is usually someone in the mix playing "dirty". Sorry for the extensive answer to your very simple, but great, question.