Alex Tabarrok (reference below) defines private cost is the cost paid by the consumer or producer.
- Private cost – the cost paid by the consumer or the producer
- External cost – a cost paid by bystanders, by people other than the consumer or producer (see External Costs)
- Social cost – the cost to everyone: the private cost + external cost (see Social Cost)
Atlas topic, subject, and course
Alex Tabarrok, minute 4:42 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.