social costs


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Related to social costs: External costs, Social benefits

social costs

the COSTS borne by society resulting from the actions of FIRMS. Consider, for example, a river that is used by both a chemical firm to dispose of its waste and by a town as a source of drinking water. Assume that the continuous dumping of waste causes the river to become polluted. The firm incurs PRIVATE COSTS in producing chemicals but pays out nothing for the use of the river or the POLLUTION caused. The town, by contrast, is forced to install special water-treatment plants to counter the pollution. Thus, the extra cost of cleaning up the river is not borne by the firm but by society

One way to remedy this divergence of private and social costs is to tax the firm an amount equivalent to the costs of treating the pollution. Making the firm pay the full costs of supplying chemicals has the merit of encouraging it to look around for the least costly way of disposing of its waste; that is, instead of dumping its waste in the river it might be cheaper for the firm to invest in a waste disposal plant. See also MARKET FAILURE, EXTERNALITIES, WELFARE ECONOMICS, COST-BENEFITS ANALYSIS, POLLUTER PAYS PRINCIPLE.

References in periodicals archive ?
To see how social costs are calculated, consider the example of a cash purchase at a retail store.
The focal argument is that marginal social benefits, at equilibrium, must strictly exceed marginal social cost, at equilibrium, in order to correct for historical failures and expected cumulative environmental disturbances away from the optimum social extraction path.
THE MOST detailed study into the environmental, energy and social costs generated by auto manufacturers when making cars has dubbed General Motors the world's most profligate and Toyota cleanest and greenest.
'Wise, robust energy policy takes into account both the 'private cost' which is the monetary values of the fuel at the pump, and 'social costs,' which is the monetary value of the social impacts of acquiring and using that fuel," Delucchi relates.
(2007) supplement this prevalence model with rough estimates of average social costs per person-year spent in each model state based on Moore's (2006) estimates of social cost by substance.
Some might say that the worst case scenario is already silently unfolding in the form of gambling's social costs. After communities are sold the economic snake oil of a casino, its operators build demand by recruiting new gamblers and enticing old gamblers to gamble more.
In the first recorded reference to the "Coase theorem," Stigler (1966: 113) writes The Coase theorem thus asserts that under perfect competition private and social costs will be equal.
In the prior SOMEBODIES AND NOBODIES the author identified 'rankism' as a form of workplace abuse: his ALL RISE: SOMEBODIES, NOBODIES AND THE POLITICS OF DIGNITY continues the subject, exploring the personal, professional and social costs of rankism and providing strategies for change.
Raising funds on American soil fulfills complementary goals by undermining the economy, introducing counterfeit and often unsafe or adulterated products and pharmaceuticals into the consumer market, and increasing the social costs of substance abuse by feeding the demand for illicit drugs.
The notion of having prices and user charges reflect marginal social costs in transportation has been around for many years.
The chapter on social costs has very serious problems.
Civil liberty issues also have the potential to be considered as behavioral or institutional constraints on nongovernmental social costs, S(e), such that they have a maximum instead of a minimum level.