Economics Externalities Questions Medium
Private distribution refers to the allocation of goods and services based on individual preferences and market forces. In this type of distribution, individuals make decisions based on their own self-interest, aiming to maximize their own utility or satisfaction. Private distribution is guided by prices, supply, and demand, and it occurs within the framework of a market economy.
On the other hand, social distribution refers to the allocation of goods and services based on societal considerations and the overall welfare of the community. It takes into account the external costs and benefits associated with the production and consumption of goods and services. Social distribution aims to achieve a more equitable and efficient allocation of resources by considering the broader impacts on society, such as environmental effects, public health, and income distribution.
The main difference between private and social distribution lies in the factors considered when making allocation decisions. Private distribution focuses on individual preferences and market forces, while social distribution takes into account the broader social costs and benefits. While private distribution may lead to efficient outcomes in some cases, it can also result in negative externalities, where the costs of production or consumption are borne by society as a whole. Social distribution seeks to address these externalities and promote a more socially optimal allocation of resources.