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In order for a producer to make money he or she must sell what the public wants to buy. Externalities undermine the social benefits of individual’s selfishness. Smith pointed out that if consumers do not have to pay producers for benefits, they will not pay. If producers do not receive pay, they will not produce. This leads to valuable products not being produced (Caplan). This is what economists say is a market failure. Public goods arise from this line of economic thinking. These market failures provide no incentive for people to build dams, highways, armies etc. These are all market failures that cam be remedied through government intervention…i...
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