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Externalities
Effects of a production or consumption activity on other parties not directly involved in the transaction, which may be either positive or negative.
Neutral Taxes
Taxes that do not affect the allocation of resources between different goods or activities in the economy.
Excess Burdens
The economic inefficiencies or losses that result from imposing taxes or government policies.
Principle of Second Best
An economic theory that suggests when a condition for a perfect market cannot be met, the next-best solution may involve violating another condition to improve efficiency.
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