Social cost

Social cost
Social cost, in economics, is the total of all the costs associated with an economic activity. It includes both costs borne by the economic agent and also all costs borne by society at large.

Social costs
Definition: The total costs of an economic activity on both the individual and the spillover effects on third parties. Social costs are the total of private costs and any external costs.
Related glossary term: ...

Social costs The full costs borne by society whenever a resource use occurs. Social costs can be measured by adding private, or internal, costs to external costs.

Social costs
Main article: Social cost
Of great importance in the theory of marginal cost is the distinction between the marginal private and social costs. The marginal private cost shows the cost associated to the firm in question.

Social cost - Private cost plus externalities in production.
Social efficiency - Production and consumption at the point where marginal social benefit equals marginal social cost (MSB = MSC). An equitable and desirable outcome for society.

Social costs are the sum of private costs and external costs.
For example, ...

Marginal Social Cost - MSC
The total cost to society as a whole for producing one further unit, or taking one further action, in an economy.

marginal social cost the marginal cost of production as viewed by society as a whole. (15)
marginal tax rate the change in total tax divided by the change in income. (14) ...

Social cost
The cost to society as a whole from an event, action, or policy change. Includes negative externalities and does not count costs that are transfers to others, in contrast to private cost.
Social dumping ...

'The Problem of Social Cost,' Coase's other widely cited article (661 citations between 1966 and 1980), was even more pathbreaking; indeed, it gave rise to the field called law and economics.

A situation in which the private costs or benefits to the producers or purchasers of a good or service differs from the total social costs or benefits entailed in its production and consumption.

The economic and social costs of reallocating resources from .domestic industries forced to contract as a result of international competition.

' The paper on 'The problem of social cost' set out what became the Coase Theorem and a new field in economic research, law and economics; it is one of the most cited papers in economics.

Market failure - the inability of markets to reflect the full social costs or benefits of a good, service, or state of the world. Therefore, markets will not result in the most efficient or beneficial allocation of resources.

If there are external costs in consuming a good (negative externalities), the social cost will be greater than the private cost.

The term is associated with the work of Arthur Cecil Pigou, a British economist who conceived of the costs of production as including social costs.

This theory suggests that regulation is the result of a public demand for correction of market failures. The theory assumes that each regulation balances off the social costs with the social benefits of that regulation.

See also: Optimal, Values, Externalities, Saving, Equilibrium