Alex Tabarrok (reference below) describes the efficient equilibrium as the point at which private demand intersects the Social Cost curve. When there is a significant External Cost associated with the activity, the efficient equilibrium will be different from the Market Equilibrium, the intersection of demand and the supply curve that reflects the Private Cost of provision. (See Externality.)
Atlas topic, subject, and course
The Economist, Deadweight cost/loss, Economics A-Z, at http://www.economist.com/economics-a-to-z/d#node-21529719, accessed 6 May 2016.
Alex Tabarrok, minute 7:00 to 9:15 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.