Bystanders Surplus

… a core term used in Economic Analysis and Atlas102

Definition

Alex Tabarrok (reference below) uses the term bystanders (or bystander’s or bystanders’) surplus to be the equivalent of Consumer Surplus and Producer Surplus as it applies to everyone else affected by an action.

Social Surplus = Consumer Surplus + Producer Surplus + Bystanders Surplus

Tabarrok notes that when there are significant bystanders’ (external) costs or benefits the market will not maximize social surplus.

Atlas topic, subject, and course

Externalities (core topic) in Economic Analysis and Atlas102 Economic Analysis.

Source

Alex Tabarrok, minute 5:56 of An Introduction to Externalities (12-minute video), Principles of Economics – Microeconomics, Marginal Revolution University, at http://www.mruniversity.com/courses/principles-economics-microeconomics/externalities-definition-pigovian-tax, accessed 6 May 2016.

Page created by: Ian Clark, last modified 6 May 2016.