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economics · externalities · market equilibrium

Market Equilibrium with Negative Externality

Typ BlockdiagrammStandard Ogata / standard controls textbook conventionEngine schematex-blockdiagramAktualisiert 24.7.2026
Market Equilibrium with Negative Externality
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Das Szenario

A market with a negative externality, where the social cost of production exceeds the private cost, causing overproduction and deadweight loss.

Was diese Zeichnung zeigt

Die dahinterstehenden Entscheidungen verstehen.

01

Model externality as additive disturbance to private supply.

02

Separate private and social market blocks to compare equilibrium quantities.

03

Use sum node to compute deadweight loss from quantity difference.

When illustrating how externalities cause market failure and quantifying welfare loss.

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