Talk:Deadweight loss

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Please help improve this article or section by expanding it. Further information might be found on the talk page or at requests for expansion. (January 2007)

I doubt I completely understand this but a dead weight loss sounds like gouging. Why not use the Tickle-me elmo xmas example. At least thats how I think the nail example relates. At any rate I don't think nails is a good example and we should look for a historical one. —Preceding unsigned comment added by 72.148.115.85 (talk) 10:39, 19 December 2007 (UTC)

"Price gouging" is a normative term generally used by consumers in the face of highly inelastic short-run supply to describe seemingly "unfair" changes in market price caused by outward shifts of demand. Deadweight loss in a market represents the existence of a Pareto improvement, implying that said market outcome or equilibrium is not Pareto efficient. Absent market failures, this cannot logically occur. Please don't put anything about tickle-me Elmo on this otherwise decent page. Instead, consider this: When Tickle-me Elmo had a fixed supply during the christmas rush, the units were allocated to those people who valued them the highest. No person whose marginal benefit was higher than the Elmo's marginal cost was denied a unit, and no person whose marginal benefit was lower than the Elmo's marginal cost purchased one. There were no market failures, only high demand and nearly fixed supply. Thus, no deadweight loss. Bsdlite (talk) 19:46, 17 February 2008 (UTC)

[edit] Merger proposal

Deadweight loss and excess burden of taxation are synonyms closely related. I propose that we merge them. --Explodicle (talk) 16:36, 18 March 2008 (UTC)

While I disagree that they're synonyms (because (non-pigouvian) taxation creates dwl, but not all dwl is caused by taxation), I agree that maybe the ideas from the excess burden of taxation page might be more useful on this article. Bsdlite (talk) 21:31, 31 March 2008 (UTC)

You're right. I've changed my original statement. --Explodicle (talk) 15:17, 1 April 2008 (UTC)

All someone needs to do to make this a whole lot simpler is make a graph for the nail example with labled axis, showing the equlibrium is 10 cents and the new monopoly price e.t.c...