Economics of Welfare and Social Services

Unfortunately, not all private activity raises social welfare: there are circumstances where individuals take actions that do not account for spill over effects on others, both good and bad. Outcomes of this kind depend very much on the institutional arrangements–or rules of the game–that establish the environment within which we function. For example, laws establish the way property rights are allocated in every economy. In some circumstances they are established by traditional custom, and in others by government policy.