Class #18 "Market Transactions" (10/14/2011)

Market Transactions generally create positive sum outcomes, since both parties benefit.
Markets are often wrong for two main reasons:

1. The "Lack of Markets" from externalities, information problems, and market power. 
2. Institutions matter, and they play a role in the efficiency of markets. 

Efficiency

• What people want
• Lowest price possible 

Institutions are critical:

• The Rule of Law
• Laws apply equally to everyone
• Laws should not be arbitrary

Inflation

• Every price goes up across the market
• Caused due to a increase in the amount of money for the same amounts of goods. 

-Rizzo

Daniel Gaona