I was about to vehemently disagree with you, but then I realized that you said best, not good. Market prices are indeed the best approximation of social cost that we have to work with (even if we wish we had a better one).
I was about to disagree with you as well, then I realized you probably mean something specific by “social cost” but I’m not 100% sure what. What exactly is social cost? It seems to me that an item produced without safety regulations will be cheaper than one that is not, but that’s a negative trait in my book.
Social costs are the sum of all the private individual costs.
Safety regulations don’t necessarily make a product safer although they almost always raise prices in part by restricting entry into the product’s market.
Because it costs resources to make a product safer it’s socially inefficient to have products that are too save.
I was about to vehemently disagree with you, but then I realized that you said best, not good. Market prices are indeed the best approximation of social cost that we have to work with (even if we wish we had a better one).
You can still “vehemently disagree with [me]” since I think my post would hold true if I replaced “best” with “good”.
I was about to disagree with you as well, then I realized you probably mean something specific by “social cost” but I’m not 100% sure what. What exactly is social cost? It seems to me that an item produced without safety regulations will be cheaper than one that is not, but that’s a negative trait in my book.
Social costs are the sum of all the private individual costs.
Safety regulations don’t necessarily make a product safer although they almost always raise prices in part by restricting entry into the product’s market.
Because it costs resources to make a product safer it’s socially inefficient to have products that are too save.