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Worked-example setupScope and assumptions
- The clean Linden equations omit every third-party effect; a neighborhood disposal harm is introduced only as a fictional diagnostic prompt.
- No magnitude, causal estimate, legal duty, affected population, remedy cost, enforcement capacity, or distributional criterion is supplied.
- The baseline market calculation remains arithmetically valid inside its narrow buyer-and-seller scope.
- Period
- One representative fictional week
- Units
- USD per qualifying chair, qualifying chairs per week, and binary evidence-boundary labels
- Rounding
- Exact whole-dollar market price and whole-chair model quantity
The narrow model still clears
Linden demand and supply clear at $60 and 800 chairs. Buyer plus seller surplus is $64,000 under the supplied curves and exclusions. Now suppose a reviewer alleges that chair disposal imposes an uncompensated neighborhood harm not included in buyer willingness to pay or seller cost.
The allegation does not make the equilibrium arithmetic wrong. It challenges the scope of the efficiency benchmark.
Build the diagnosis
A reviewable market-failure claim must identify:
- the affected people and harm;
- the activity and causal pathway;
- the unit, period, magnitude, uncertainty, and evidence;
- why contracts, prices, liability, or existing rules do not internalize it;
- the corrected social-cost or rights-based benchmark; and
- the margin at which behavior would change.
No such evidence is supplied, so the example stops at a diagnostic hypothesis.
Compare institutions rather than announce a remedy
Possible responses could involve information, product standards, take-back contracts, liability, fees, taxes, disposal services, or enforcement. Each has administrative cost, information needs, distribution, evasion, capture, and unintended effects. A valid diagnosis does not make one response optimal by definition.
Accounting records may help document expenditures, obligations, provisions, or transactions. They do not automatically measure uncompensated social harm. The next evidence must match the claim rather than the convenience of the ledger.
Verified calculation · economics foundations analysis
The curriculum loader recomputed this example before it entered the site build. Expand any structured input to inspect the stated facts.
- linear markets
- 1 field
Inspect data
{
"narrow_linden_market": {
"demand_intercept_quantity": 1400,
"demand_quantity_per_price": 10,
"price_checks": {
"equilibrium_price": 60
},
"supply_intercept_quantity": 200,
"supply_quantity_per_price": 10
}
}Recomputed result
| Measure | Value |
|---|---|
| price | 60 |
| quantity | 800 |
| total surplus | 64,000 |