‘Market Failure, Public Goods, and Externalities’

Chapter 02

Course Name: Public Finance

Course Code: FIN 306
Submitted to:

Dr. Jannat Ara Parveen

Professor
Department of Finance, University of Chittagong.

Submitted by:
Team Squadron and Team Summit
BBA, 6th Semester.
Department of Finance, University of Chittagong.
 Submission Date: 30 January 2023

Learning Objectives

After reading this chapter, the learners will be able to:

2.1 Define market failure and understand the causes of market failure.

2.2 Explain the types of market failure and solutions to market failure.

2.3 Explain the Role of Government in market failure.

2.4 Define Public Goods and their characteristics.

2.5 Discuss the types of Public Good.

2.6 Define and Explain Efficient Output of Public Good.

2.7 Define externalities and Types of externalities.

2.8 Discuss how to internalize positive externalities through proving subsidies

2.9 Discuss how to internalizing negative externalities through imposing tax.

2.10. Explain property rights to resource use and internalization of externalities using the

Coase Theorem.
2.1 DEFINITION OF MARKET FAILURE
Market failure is the economic situation defined by an inefficient distribution of goods and
services in the free market. Furthermore, the individual incentives for rational behavior do not
lead to rational outcomes for the group. Put another way, each individual makes the correct
decision for him/herself, but those prove to be the wrong decisions for the group. In traditional
microeconomics, this is shown as a steady state disequilibrium in which the quantity supplied
does not equal the quantity demanded.
Market failure due to Nonrival Consumption
Exclusion is inappropriate in the case of social goods because their consumption is nonrival.
That is, they are goods such that A's partaking of the consumption benefits does not reduce the
benefits derived by all others. The same benefits are available to all and without mutual
interference. Therefore, it would be inefficient to apply exclusion even if this could readily be
done. Since A's partaking in the consumption benefits does not hurt B, the exclusion of A would
be inefficient. Efficient resource use requires that price equal marginal cost, but in this case
marginal cost (the cost of admitting an additional user) is zero, and so should be the price.
Market Failure due to non-excludability
A second instance of market failure arises where consumption is rival but exclusion though
appropriate is not feasible. Whereas most goods which are rival in consumption also lend
themselves to exclusion, some rival goods may not do so. Consider, for example, travel on a
crowded cross-Manhattan Street during rush hours. The use of the available space is distinctly
rival and exclusion (the auctioning off or sale of the available space) would be efficient and
should be applied. The reason is that use of crowded space would then go to those who value it
most and who are willing to offer the highest price. But such exclusion would be impossible or
too costly to be administered. 1 We are dealing with a situation in which exclusion should but
cannot be applied. Here the difficulty of applying exclusion is the cause of market failure. Public
provision is required until techniques can be found to apply exclusion.
CAUSES OF MARKET FAILURES
Market failure may occur in the market for several reasons, including:
Externality
 An externality refers to a cost or benefit resulting from a transaction that affects a third
party that did not decide to be associated with the benefit or cost. It can be positive or
negative. A positive externality provides a positive effect on the third party.
 On the other hand, a negative externality is a negative effect resulting from the
consumption of a product, and that results in a negative impact on a third party.
Public goods
 Public goods are goods that are consumed by a large number of the population, and their
cost does not increase with the increase in the number of consumers.
 Public goods are both non-rivalrous as well as non-excludable.
 Non-rivalrous consumption means that the goods are allocated efficiently to the whole
population if provided at zero cost.
 Non-excludable consumption means that the public goods cannot exclude non-payers
from its consumption.
 Public goods create market failures if a section of the population that consumes the goods
fails to pay but continues using the good as actual payers.
Market control
 Market control occurs when either the buyer or the seller possesses the power to
determine the price of goods or services in a market. The power prevents the natural
forces of demand and supply from setting the prices of goods in the market.
 On the supply side, the sellers may control the prices of goods and services if there are
only a few large sellers (oligopoly) or a single large seller (monopoly). The sellers may
also control the quantity of goods produced in the market and may collude to create
scarcity and increase the prices of commodities.
 On the demand side, the buyers possess the power to control the prices of goods if the
market only comprises a single large buyer (monopsony) or a few large buyers
(oligopsony).
Imperfect information in the market
 Market failure may also result from the lack of appropriate information among the buyers
or sellers. The lack of information on the buyer’s side may mean that the buyer may be
willing to pay a higher or lower price for the product because they don’t know its actual
benefits.
 On the other hand, inadequate information on the seller’s side may mean that they may be
willing to accept a higher or lower price for the product than the actual opportunity cost
of producing it.
Presence of Merit and Demerit goods
 Merit goods are those which are beneficial to the society (school, hospital, church etc.).
On the other hand, demerits goods are those that are harmful for the society. Historically
it is proved that demerit goods are overproduced because of higher demand than the merit
goods. Markets may also fail to control the manufacture and sale of goods like cigarettes
and alcohol, which have less merit than consumers perceive. This imbalance brings about
market failure
Carrot and stick policy
 Govt. should provide various incentives to the businessmen who are doing honest
business and also gives punishment to the corrupt businessman. Reality is that across the
globe government does provide carrot to the dishonest people and provide stick
(punishment) to the carrot business people. This inverse practice is responsible for the
market failure.
Lack of property right
 When in the market, the property right of the owner is not ensured by the government.
Entrepreneur will be demotivated for further production. Thus economy will face under
production leads to market failure. When consumers and producers get their property
right to own property than markets work most effective
Unnecessary Government intervention
 An effective market always makes distorted and inefficient MARKET when government
intervened
COMBINED CAUSES OF MARKET FAILURE
Although the features of nonrival consumption and non-excludability need not go together, they
frequently do. In these instances-for example, air purification, national defense, streetlights
exclusion both cannot and should not be applied. Since these are situations where both causes of
market failure overlap, it may be futile to ask which is the basic cause. However, the nonrival
nature of consumption might be considered as such, since it renders exclusion undesirable
(inefficient) even if technically feasible.
2.2 TYPES OF MARKET FAILURE
Each cause of market failure triggers a specific type. Let’s check the most common ones below.
Missing Market
During imperialism, many colonizers forced the farmers to overproduce cash crops like cotton
and coffee when there were colonies. This created a shortage of land and resources to produce
rice, wheat, and sugar.
Many colonies suffered through adequate starvation as there was no proper market of essential
food commodities for people to purchase from. Many colonies, after seeking independence,
restructured their economy to become self-sufficient in food crops. This is an example of missing
markets.
Monopoly
Monopoly is one of the most common causes. If a single actor acquires all of the means of
production in a market, it will set prices as they wish because it will face no competition. Often,
this company will set prices much higher than they need because no one else can compete with
them, so their rational decision will be to profit more.
Externalities
Externalities and market failure are common. It happens when your consumption of a good
affects an uninvolved third party. In a positive example, someone else’s action helps you. For
example, your property’s value may arise if someone builds a luxury condominium near your
house. However, if they build a prison complex, the price will be negatively affected, resulting in
a negative externality.
When governments spend too much money, for instance, they can trigger a negative externality
and market failure as the taxpayers end up paying more money for someone that will not benefit
them in the same way.
Unable to attain equal opportunities
When societies fail to allocate resources judiciously, a segment of the population thrives on
abundance over the taxpayers’ money while the needy struggle to meet basic needs. This causes
a disequilibrium between demand and supply.
Asymmetric Market Information
Another leading cause is asymmetric information that happens when there’s not enough
information to guide buyers and sellers of a good. Because the participants are not well-
informed, prices will not reflect the real value and may vary significantly depending on where
you buy them.
Others
Market speculation can also drive prices up and down without representing reality just as
quickly. Public goods like national defense are also a type of market failure. Not everybody pays
for them (for instance, avoid taxes), but everybody can use them. Finally, several factors, such as
geographical unemployment or climate change, can also contribute to such failures
SOLUTIONS FOR MARKET FAILURE
Fortunately, a few solutions can help markets that are failing. As a general rule, each cause has
its solution. For example, you can’t solve a problem caused by asymmetrical information by
imposing taxes. However, other problems could potentially be solved by that.
Government Interference
Governments have the power to interfere in the economy to get certain results. One of the most
common solutions to rational actions harming the market is to change them by imposing taxes or
sanctions on the industries. This will make it easier or harder to act in a certain way and modify
their behavior.
Anti-trust laws, on the other hand, are good to prevent monopolies. By determining that the same
conglomerate cannot own more than a certain market share, you ensure a freer market in which
several companies can compete.
Private Agreements
Private consortiums can also act to diminish market distortions. For example, a group with
similar interests joins together and enforces agreements between group members. They do it
because they see collective advantages in enforcing these agreements, and following them will
lead to a better overall result.
Market Education and Information
The best way to solve information asymmetries is to inform the market participants well. You
will solve price fluctuations regarding inaccurate information by teaching the participants the
real price they are paying. Consumer forums, blogs, rating agencies, media, and social media all
work towards decreasing information asymmetries.
2.3 Role of government in market failure
Role of government in correcting market failure and dealing with market failure is inevitable
especially in developing countries due to scarce available resources. However, when market
failure happens, a government can always intervene and fix the failure. It includes ways the
government applies to correct problems of market failure in an economy associated with the
purchase of public goods, external costs and benefits, and imperfect competition.
1. Direct Provision
A common method used by governments to fix market failures in public goods is direct
provision. In other words, the government oversees the production and/or distribution of
public goods among the population. This alternative is most obvious in the field of
defence. National governments recruit soldiers, purchase arms and equipment, maintain
military bases, and generally oversee military operations. Governments also tend to
provide products that are not subject to market control, called utilities. These include
water supply, power generation, and waste collection.
2. Regulation
Governments set the rules of the game, which is what they usually do for the people, but
in this case, they are specifically aimed at correcting market failures.
Government regulations are often used to eliminate market surveillance, external factors,
and market failures due to incomplete information. For example, a company with
significant market control may regulate prices by the government. Alternatively,
governments can limit the number of pollutants emitted from certain industrial activities.
 Rules requiring sellers to provide information to buyers are a means of combating market
failures due to incomplete information.

3. Taxes
The government directs the creation of barriers to prevent unwanted activities. Taxes are
suitable for controlling external factors or facilitating the provision of information. For
example, if the government imposes a tax equal to the external cost, the efficiency of the
industry producing pollution externalities can be stimulated. Alternatively, government
subsidies can be used to encourage activities with negative efficient taxes and to
eliminate inefficient market externalities.
4. Public goods
These are goods that can ultimately be used by a huge number of people at the same time
with the consumption of one not necessarily rendering an opportunity cost on the other,
this is known as non-rival consumption. Role of government in correcting market failure,
includes the monitoring of Non-rival consumption entails that public goods are
adequately spread across if they are being made available at a zero price which is
something markets are reluctant to do. Further, the failure to side-line non-payers for
consumption creates what is known as a free-rider problem which further prevents
volunteer exchange
Common examples of public goods are national defence, public health, and
environmental quality. In any case, consumption by one does not create an opportunity
cost for others, and non-payers cannot be excluded from consumption. And in any case,
markets fail to efficiently allocate production, consumption, or supply, has everything to
do with role of government in correcting market failure.
In close proximity to the public goods are near-public goods and common-property
goods. These share only the two key elements of non-rival consumption or the inability to
cut out non-payers. Near-public goods, like public goods, are not competitive in
consumption, but non-payers can be excluded.
Unrivalled consumption means that efficiency is achieved by providing near-zero public
goods, which markets do not. Like public goods, common-property goods are
 characterized by the fact that they cannot exclude non-payers, but they compete in
consumption, that’s another role of government in correcting market failure.

5. Market control
Market control occurs when buyers or sellers can influence the price of goods and/or
transactions. The ability to control the market, especially the market price, does not allow
the market to correct its demand and supply prices.
Supply-side market control allows sellers to determine the demand price for the cost of
non-produced goods and the cost of goods produced. An example of supply-side market
control is a monopoly market with a single seller. A less extreme but more common
example is an oligopoly, a market with a small number of large sellers.
Demand-side market control allows buyers to set their supply price, that is, the cost of
non-produced goods, below the cost of goods produced. An extreme example of demand-
driven market management is monopolies, i.e., single-customer markets. A less extreme
but more common example is oligopsony, a market with few large buyers.
6. Externalities
Externalities occur when the bid price does not include the benefits or the costs do not
include the bid price. This means that the quotation does not reflect the full value of the
product produced, or that the quotation does not reflect the full value of the non-produced
product. Therefore, the market equilibrium does not provide efficient distribution.
Pollution is a typical example of externalities. Residual emissions from the production or
consumption of goods create an opportunity cost for others. In this case, the bid that wins
the market does not include all of the opportunity costs of production. Missing costs are
those that are passed on to others affected by the pollution.
In terms of benefits, education is an example of an externality. The benefits of education
go beyond the educated person and beyond the market exchange. In this case, role of
government in correcting market failure includes the market demand price does not
include the full cost of the product, and the lost value is what others gain from education.
7. Imperfect information
 Lack of information from the buyer or seller often means that the bid does not capture all
the benefits of the product or that the bid does not capture all the opportunity costs of
production. In other words, buyers may be willing to pay more or less for a product
because they don’t know the true benefit of the product. Alternatively, the seller is
willing to accept an amount that is more or less than the actual cost of replacing the
production of the good.
In many cases, the seller has more complete information about the product than the buyer. The
seller owns and controls the goods and is directly related to the goods. Most likely, they will find
out if there is a shortage or problem with the product. On the other hand, the buyer is not familiar
with the product. He only knows the information provided by the seller. In this case, the buyer
typically has a different search price than the value of the product created, and this value is based
on more complete information.

2.4 PUBLIC GOODS

Definition: In economics, a public good refers to a commodity or service that is made available
to all members of a society. Typically, these services are administered by governments and paid
for collectively through taxation.
Examples of public goods include law enforcement, national defense, and the rule of law. Public
goods also refer to more basic goods, such as access to clean air and drinking water.
An important issue that is related to public goods is referred to as the free-rider problem. Since
public goods are made available to all people–regardless of whether each person individually
pays for them–it is possible for some members of society to use the good despite refusing to pay
for it. People who do not pay taxes, for example, are essentially taking a "free ride" on revenues
provided by those who do pay them, as do turnstile jumpers on a subway system.
Key take ways-
1. Public goods are the opposite of private goods, which are inherently scarce
and are paid for separately by individuals.
2. Public goods are commodities or services that benefit all members of society,
and which are often provided for free through public taxation.
 3. Societies will disagree about which goods should be considered public goods;
these differences are often reflected in nations’ government spending
priorities.
How public goods work
The two main criteria that distinguish a public good are that it must be non-
rivalrous and non-excludable. Non-rivalrous means that the goods do not
dwindle in supply as more people consume them; non-excludability means that
the good is available to all citizens.
CHARACTERISTICS OF PUBLIC GOODS
The commodities that are shared without profit to all entity of a society are referred as Public
Goods. The distribution of public goods always focuses at the well-being of mass people. These
commodities have distinctive features that benefit individuals and groups to access them, and
should be distributed in such a manner that, those become available to the public in general. A
public good has two characteristics: -
 Non-rival in consumption: It states that, when a commodity is consumed, it doesn’t
hamper the amount available for others. For instance, being benefited by street light does
not reduce the light available for others.
 Non-exclusion in consumption: This occurs when it is not possible to provide a good
without it being possible for others to enjoy. For example, if you built a bridge, you
cannot prohibit others to use it.
2.5 TYPES OF PUBLIC GOODS
1. Pure Public Goods
Pure public goods are those that are both perfectly non-excludable and non-rivalrous.
IN other words, the supplier cannot prevent people from using the good, nor will its
consumption prevent others from accessing it.
Such examples include: national defense, lighthouse, policing, national park and
knowledge.
 Characteristics of pure public goods:
 1. Non-excludability
2. Non-rivalrous
3. Free rider problem
2. Quasi-Public Goods
Quasi-public goods are a sort of hybrid between private goods and public goods. They
have characteristics of both. For example, they are partially excludable, and are partially
rivalrous. Some of these goods include roads, tunnels, bridges, museums, the internet,
and TV. Whilst such goods are commonly non-excludable, there are toll roads, pay-to-
access websites, and premium cable TV. All of them require payment to access and
can easily and profitably exclude people.
Quasi-public goods are sometimes considered public goods because private businesses
may be unwilling or unable to fulfil the nations demand.
3. Impure public goods:
A good that has some of the characteristics of a public good but is not entirely non-
rivalrous or non-excludable. An impure public good may be non-excludable but can
become congested (see common access resource), or it may be non-rivalrous but
exclusion may be possible. For example: club goods.
4. Merit goods:
Merit goods are those goods and services that the government feels that people will
under-consume, and which ought to be subsidised or provided free at the point of use
so that consumption does not depend primarily on the ability to pay for the good or
service.
A merit good can be defined as a good which would be under-consumed (and under-
produced) by a free market economy, due to two main reasons:
a. When consumed, a merit good creates positive externalities (an externality
being a third party/spill-over effect of the consumption or production of the
good/service). This means that there is a divergence between private benefit
and public benefit when a merit good is consumed.
b. Individuals are short-term utility maximizers and so do not take into
account the long-term benefits of consuming a merit good, so they are
under-consumed.
 Example: primary education, vaccination, public libraries etc.
5. Congestible goods:
Congestible goods describe situations in which a group of people share or use a public
good that becomes congested or overexploited when demand is low. We study
experimentally a congestible goods problem of relevance for parking design, namely
how people choose between a convenient parking lot with few spots and a less
convenient one with unlimited space. We find that the Nash equilibrium predicts
reasonably well the competition for the convenient parking when it has few spots, but
not when it has more availability. Example: roads, parking space etc.
6. Digital Public Goods:
Digital public goods include software, data sets, AI models, standards and content that
are open source.
A digital public good is defined by the UN Secretary-General's Roadmap for Digital
Cooperation, as: “open-source software, open data, open AI models, open standards and
open content that adhere to privacy and other applicable laws and best practices, do no
harm, and help attain the SDGs”.
PUBLIC GOODS AND FREE RIDER PROBLEM
Many of the most important publicly provided goods-such as public health programs and
national defense are non-excludability. For instance, the international vaccine program against
smallpox virtually wiped out the disease, to the benefit of all, whether they contributed to
supporting the program or not. While national defense has the property of non-excludability and
zero marginal cost, there are a few goods which have the property of at least high costs of
exclusion, even though the marginal cost of using the good is positive. Congested urban streets
are an example: under current technology, it is expensive to charge for the use of the street. But
if one more person uses it, another is dis placed indeed, in some cases, as more people attempt to
use the street, the total throughput of the street may even be decreased.
Why voluntary cooperation will not work in public goods? An example can answer this
question-
Suppose, 10 people want to build a dam, a public good. Which will cost 5000 and make benefit
of 10000. So, with the benefit of 5000 everyone will be better off. But one of them will think that
whether he contribute in the building of the dam or not he will get the benefit as it is a public
good it will be used by everyone. So, whether someone contribute or not he will be benefited,
and it will at zero cost. So, it is rational for him to decide not to contribute, but to take benefit. In
a word he decides to withdraw his voluntary contribution that he decided to make before. Now as
high cost of exclusion if the dam is being built every one including him will be benefited. In this
case he will be called a free rider. The problem is called the free rider problem. Attempting to
avoid cost in financing a public goods and taking benefit freely.
But most of the people in a community decide to be a free rider it will be impossible to finance
any kind of public goods. So, we can say that, the larger the group of free riders, the more it is
likely that a public good cannot be financed by voluntary contributions.
In large group only one person's contribution is not that much effective. The output will depend
on whether the remaining persons decide to withdraw their contribution or not.
When the benefits of public goods are non-rival, it is unlikely that the outcome will occur.
Because they know that they will still be benefited, if they don’t contribute. So, they Don’t
contribute. As a result, the occurrence outcome will get unsured.
The free rider problem is not necessarily a bad thing. However, in some cases it serves a useful
function. For example, if the free rider problem may inhibit the formation of collusive agreement
among business to restrict output and raise prices
When a good has both the characteristics of nonrival and non-exclusive we can’t provide public
goods efficiently because of free rider problem. But if one good is nonrival but exclusion is
feasible then we can provide efficient public goods. Such as movie theatres, here it is nonrival at
least up to the size of theatre and exclusion is possible by excluding those who Don’t pay for
tickets.
There are a few cases where non-excludable public goods are provided privately. Usually this is
because there is a single, large consumer whose direct benefits are so large that it pays him to
provide it for himself. He knows that there are free riders benefiting from his actions, but in
deciding how much to supply, he looks only at his own direct benefit, not at the benefits that
accrue to others. For instance, a large ship owner might find it worthwhile to install a lighthouse
and light buoys, even if others cannot be excluded from enjoying the benefits. But in deciding
how many lighthouses and buoys to construct, he looks only at the benefits which accrue to his
own ships. The total benefit of an additional buoy-including the benefits both to his own ships
and to others, for instance-might be considerable, even though the direct benefit to his own ships
might not warrant the additional cost. In that case he would not put the additional buoy into
place. Thus, even if there is some private provision of public goods, there will be an
undersupply.
The free rider problem is just a reflection of an important incentive problem that arises in the
case of public goods: If the good is going to be provided anyway, why should pay? What would
contribute would be negligible, and hardly alter the aggregate supply. To be sure, if everyone
reasoned the same way, the good would not be supplied. That is one of the arguments for
government's providing these goods, because government has the power to compel people to
contribute (through taxes).
2.6 EFFICIENT OUTPUT OF PUBLIC GOODS

THE EFFICIENCY CRITERION

Efficiency is a normative criterion for evaluating the effects of resource use on the well-being of
individuals. The efficiency criterion is satisfied when resources are used over any given period
of time in such a way as to make it impossible to increase the well-being of any one person
without reducing the well-being of any other person. To most, efficiency means producing a
desired result with a minimum of effort or expense.
Let’s begin using the efficiency criterion. First, assume that the well-being of any individual
increases with the amount of goods and services that he or she consumes per year. It is easy to
show how avoiding waste in production will help achieve efficiency. Given available amounts of
productive resources and the existing state of technical knowledge in an economy, elimination of
wasted effort will allow more production from available resources. The extra production will
make it possible for some persons to consume more without reducing the amounts consumed by
others. As a result, it would be possible to make some individuals better off without harming
anyone else by avoiding waste in production.
Another important aspect of efficiency is freedom to engage in mutually advantageous
exchanges. If you are free to engage in transactions for gain, you can obtain more satisfaction out
of your income. For example, suppose you have a collection of heavy-metal-rock compact discs
you no longer enjoy. By exchanging those discs for a collection of classic rock-and-roll discs that
you value more, you can become more content. If you find a person who really wants your
heavy-metal-rock discs and has a set of classic rock-and-roll discs you highly value, then both
you and your friend can gain by trading. Freedom to trade is an important aspect of efficiency.
Both buyers and sellers can gain in markets when the value a buyer places on an item exceeds
the cost the seller incurs by making it available for sale. Constraints that prevent resources being
used and traded in such a way as to allow mutual gains will prevent achievement of efficiency.
When efficiency is attained, mutual gains from reallocating resources in productive use or
through further exchange of goods and services among individuals are no longer possible.
Many citizens argue that not all mutually gainful trades should be allowed. Such individuals
demand that the powers of government be used to prevent ex- changes they find morally
objectionable. They argue that government should exercise paternalistic powers over the choices
of its citizens. Thus, it is common to observe laws banning the sale of certain drugs, gambling
services, prostitution, and other activities in which some persons might wish to engage but which
others find morally objectionable.
The criterion of efficiency is based on an underlying value judgment that individuals should be
allowed to pursue their self-interest as they see fit, provided that no one is harmed in the process.
Those who wish to intervene to prevent others from pursuing their self-interests disagree with
this underlying value judgement. The individualistic ethic underlying the efficiency criterion,
therefore, is not acceptable to all persons.
MARGINAL CONDITIONS FOR EFFICIENCY
The conditions required for the efficient output of a particular good over a period of time can be
derived easily. Analysis of the benefits and costs of making additional amounts of a good
available is required to determine whether the existing allocation of resources to its production is
efficient. Any given quantity of an economic good available, say per month, will provide a
certain amount of satisfaction to those who consume it. This is the total social benefit of the
monthly quantity. The marginal social benefit of a good is the extra benefit obtained by making
one more unit of that good available per month (or over any other period). The marginal social
benefit can be measured as the maximum amount of money given up by people to obtain the
extra unit of the good. For example, if the marginal social benefit of bread is $2 per loaf, some
consumers would give up $2 worth of expenditure on other goods to obtain that loaf and be
neither worse nor better off by doing so. If these consumers could obtain the bread for less than
$2 per loaf, they would be made better off. The marginal social benefit of a good is assumed to
decline as more of that good is made avail- able each month.
The total social cost of a good is the value of all resources necessary to make a given amount of
the good available per month. The marginal social cost of a good is the minimum sum of money
required to compensate the owners of inputs used in producing the good for making an extra unit
of the good available. In computing marginal social costs, it is assumed that output is produced at
minimum possible cost, given available technology. If the marginal social cost of bread is $1 per
loaf, this is the minimum dollar amount necessary to compensate input owners for the use of
their inputs without making them worse off. If they were to receive more than $1 per loaf, they
would be made better off. If they were to receive less than $1 per loaf, they would be made
worse off by making that extra unit available. The following analysis assumes that the marginal
social cost of making more bread available per month does not decrease as the monthly output of
bread is increased.
Figure 2.1A graphs the marginal social benefit (MSB) and marginal social cost (MSC) of making
various quantities of bread available per month in a nation. Figure 2.1B shows the total social
benefit (TSB) and the total social cost (TSC) of producing the bread. The marginal social benefit
is TSB/ Q, where TSB is the change in the social benefit of the good and Q is a one-unit increase
in the output of bread per month. The marginal social benefit is measured by the slope of the
total social benefit curve at any point. Similarly, the marginal social cost,
TSC/ Q, is measured by the slope of the total social cost curve at any point. The efficient output
of bread can be determined by comparing its marginal social benefit and marginal social cost at
various levels of monthly output. Look at the output corresponding to Q1 10,000 loaves of bread
per month in Figure 2.1A. This monthly output level is inefficient because the marginal social
benefit of bread exceeds its marginal social cost. The maximum amount of money consumers
would give up to obtain an additional loaf of bread exceeds the minimum amount of money
necessary to make input owners, whose resources are used to produce bread, no worse off.
For example, suppose that at Q1 the MSB $2 while MSC $1. The consumer who gives up $2 for
the bread is no worse off because the marginal benefit is $2. If the input owners making the
bread available were to receive $2 from each buyer, they would be made better off because $2
exceeds the minimum amount they require in compensation for the use of their inputs to produce
that bread. This demonstrates that the monthly output of 10,000 loaves is inefficient, because
suppliers of bread can be made better off without harming any consumer by making more bread
available.
The marginal net benefit of a good is the difference between its marginal social benefit and its
marginal social cost. When marginal net benefits are positive, additional gains from allocating
more resources to the production of a good are possible.
The efficient level of output, Q, occurs at point E. At that monthly output, MSB MSC. The
monthly output Q maximizes the difference between TSB and TSC, as shown in B. Extension of
monthly output to the level corresponding to equality of TSB and TSC would involve losses in net
benefits. Similarly, output levels Q1 and Q2 are inefficient.
Whenever the marginal social benefit of a good exceeds its marginal social cost, it will be
possible to make at least one person better off without harming another by producing more of the
good. Net gains from allocating resources to additional production of the good continue just up
to the point at which the marginal social benefit of the good falls to equal its marginal social
cost. If additional resources were allocated to produce more of the good per month beyond that
point, marginal social costs would exceed marginal social benefits. The marginal net benefit of
such additional resource use would be negative. In other words, if output were increased beyond
the Q* 15,000 loaves of bread per month, consumers would be unwilling to sacrifice enough to
compensate input owners for all the costs involved in making the extra units of bread available.
The result is that consumers cannot be made better off without harming producers when more
than Q* units of output are produced per month.
The marginal conditions for efficient resource allocation require that re- sources be allocated
to the production of each good over each period so that-
MSB= MSC
THE LINDAHL EQUILIBRIUM
Point E in Figure 4.6 is called a Lindahl equilibrium, after the Swedish economist Erik Lindahl.
The voluntary contribution per unit of the public good of each member of the community equals
her marginal benefit of the public good at the efficient level of output. These equilibrium
contributions per unit of the public good are sometimes called Lindahl prices. If the good were
made available at these prices per unit for each of the consumers, the quantity demanded by each
consumer would be the efficient amount of three security guards per week.
In effect, the Lindahl equilibrium also could be achieved by assigning each participant a Lindahl
price per unit of the public good. Each person would have to be assigned a price that equals her
marginal benefit at the efficient output of the good. In equilibrium, all three individuals would
unanimously agree on the efficient quantity of the good to be made available, given their
assigned Lindahl prices. In the preceding example, the Lindahl prices for each security guard
would have to equal each community member’s marginal benefit at the efficient output of three
guards per week. If disagreement about the quantity of the good arose, the Lindahl prices per unit
of the good would have to be adjusted until all individuals demand the quantity for which MSB
MSC. If disagreement ensued about the Lindahl prices, the quantity of the good would have to be
adjusted until all individuals accepted their share and no surplus or deficit in the budget existed
at the efficient output.
The solution to the model is similar to a market equilibrium, because it results in a set of price
shares per unit of the good that are unanimously accepted to finance the cost of production of a
simultaneously agreed-upon quantity. No one is forced or coerced to enter into the agreement.
Given the distribution of income and other factors that affect the demands (or willingness to pay)
of the three individuals for security protection, the outcome is a determinate quantity of the
public good and an associated cost-sharing scheme. The voluntary cooperation model presented
is one in which contributions are accepted for alternative quantities of the public good which, in
turn, are compared with the marginal cost of additional production. Other similar models have
auctioneer- announcing schemes for the division of the cost per unit of a public good in terms of
the percentages to be borne by each individual, independent of the number of units produced.
This ensures that the budget will always be in balance. Such tax-sharing schemes continually are
called out until the quantity demanded of the public good is the same for all individuals.6 The
result in both cases is identical: The public good is produced at the level where the sum of the
marginal benefits is equal to the marginal social cost, and each individual’s Lindahl price in
equilibrium reflects that person’s marginal benefit at the equilibrium level of production.
EFFICIENT OUTPUT OF A PURE PUBLIC GOOD
Efficiency requires that all economic activities be undertaken up to the point that their marginal
social benefit is equated with their marginal social cost. This principle holds for pure public
goods as well.
Suppose a person were to attempt to produce or purchase a pure public good for her own use. By
making a unit of the public good available in the community, this person will generate benefits
not only for herself but also for every other member of the community in which she resides. The
marginal social benefit of this good will be more than the extra benefit to its purchaser.
Additional benefits will accrue to each and every other person who will simultaneously enjoy
each unit made available. Summing up these benefits to all people in the community gives the
marginal social benefit for each extra unit of output produced. The marginal social benefit of any
given amount of a pure public good is the sum of the individual marginal benefits received by all
consumers. The efficient quantity per time period of a pure public good corresponds to the point
at which output is increased so that the sum of the marginal benefits of consumers equal the
marginal social cost of the good. The efficiency conditions for a pure public good are,
MSB=MB=MSC
Market sale of a pure public good for individual purchase would generate wide ranging positive
externalities, because a purchaser of the good would consider only his marginal benefit in
deciding how much to buy. The marginal external benefit would be the sum of the marginal
benefits to all other consumers. When individual buyers do not take the marginal external benefit
into account, sale of the good to individuals in a market is likely to result in less than the efficient
annual quantity. A pure private good has no external benefits of additional production. In
evaluating the benefit of extra production, it is necessary to count only the benefit received by
the individual who actually purchases and consumes the extra output. The efficiency conditions
for a pure public good can also be written as-

The equation states the marginal social benefit of a unit of a pure public good as the sum of the
benefits accruing to any one person acquiring it (MBi) and of the extra benefits that accrue to the
remaining (n-1) members of the community (MBj). The marginal social benefit is the sum of
an individual benefit and an external benefit accruing to all other members of the community.
The summation term-

represents the marginal external benefit of a unit of a pure public good made available to any one
person. The production of a pure public good generates external benefits that are positively
valued by all members of a community.
A Numerical Example
Table 4.2 provides data on the marginal benefits of three consumers who desire security
protection in a community. These data summarize the numbers used to derive the demand curve
for security protection in Figure 4.5. In the table, the marginal benefits of as many as four
security guards per week are shown for each consumer.
The efficient output occurs at point E, which corresponds to three security guards per week. At
that point, ∑MBi = MSC. The Lindahl equilibrium is also at point E. At that point, voluntary
contributions of the three people would cover the cost of the public good. Each person would
demand three security guards per week at a price per unit equal to the marginal benefit received
from three guards per week.
Suppose the weekly cost per security guard is $450. If as many guards as desired can be hired at
that rate, the average cost of security protection would be constant at $450 per unit. In this case,
a unit of security protection per week is presumed to be perfectly correlated with the services of
one security guard per week. Because average cost is constant, it is also equal to the marginal
cost. As- summing no negative externalities associated with security protection, the marginal
social cost of security protection also will be constant and equal to $450.
Table 4.2 also shows the sum of the marginal benefits, MBi, of security guards for the three
consumers at each weekly quantity. Figure 4.6 plots the marginal benefit curve of each of the
three consumers on the same set of axes as the marginal social cost curve. This latter curve is a
straight line drawn at $450. Also plotted on the axes is the sum of the marginal benefits for the
three consumers at each level of output. This latter curve gives the marginal social benefit of
alternative weekly amounts of security protection.
The efficient number of security guards for the three members of the community is three per
week. At that level of supply, corresponding to point E, the sum of the marginal benefits equals
the marginal social cost. At that level of weekly supply, the marginal social benefit equals the
marginal social cost for members of the community.
Figure 4.6 can quickly show why market provision of security protection would not result in the
efficient output. If the services of security guards we
re avail- able to individuals only through market purchases, the quantity supplied to this
community would be zero! This is because it costs $450 per week to hire each security guard. No
single resident alone values the services of the first security guard that highly. The most any one
person would pay for a security guard is $300 per week. The marginal benefit of the first security
guard for any one buyer falls short of the market price per unit necessary to cover the marginal
costs of sellers.
However, an output of zero is inefficient. The market equilibrium would be inefficient because,
as is shown in Figure 4.6, the sum of the marginal benefits of the three consumers when one
security guard per week is provided exceeds the marginal social cost of making that guard
available. The marginal social benefit of the first guard is $750, while the marginal social cost is
only $450. Therefore, it is certainly inefficient not to hire at least one security guard per week.
The efficient output is actually three security guards per week, corresponding to point E in
Figure 4.6. At that point, the sum of the individual marginal benefits equals the marginal social
cost of security protection.
2.7 DEFINITION OF EXTERNALITIES:
Sometimes in the processes of production, distribution, or consumption of certain goods, there
are harmful or beneficial side effects called externalities that are borne by people who are not
directly involved in the market exchange. These side effects of ordinary economic activities are
called external benefit when the effect is beneficial and external cost when they are harmful.
UNDERSTANDING EXTERNALITIES
Externalities occur in an economy when the production or consumption of a specific good or
service impacts a third party that is not directly related to the production or consumption of that
good or service.
For instance, immunization against a contagious disease is a consumption activity involving
external benefit. When a person vaccinated, that individual benefit directly because his or her
chance of contracting the disease is reduce but this benefit is not the external benefit. The
decision to be vaccinated also covey a benefit indirectly on other because they are less likely to
catch the disease from the vaccinated person, this is the external benefit.
External cost is also quite common and the best example can be found in the area of pollution.
Driving an automobile or operating a factory with smoking chimney pollutes the atmosphere the
other people breathe. Thus, the operation of car or factory impose cost on people not directly
involved in the activity.
TYPES OF EXTERNALITIES
An externality can be both positive or negative and can stem from either the production or
consumption of a good or services.
Negative externalities:
Negative externalities also called external costs, are costs to third parties other than the buyers or
the sellers of an item not reflected in the market price. An example of a negative externality is
the damage done by industrial pollution to people and their property. The harmful effects of
pollution are impairments to good health and reductions in the value of business and personal
property and resources.
Another example of a negative externality is the dissatisfaction caused by the noise of low-flying
aircraft as experienced by residents who are located near an airport.
Those bearing pollution damages are third parties to market exchanges between the buyers and
the sellers of goods or services. Their interests are not considered by the buyers and sellers of
goods and services when an externality is present.
Positive externalities:
Positive externalities are benefits to third parties other than the buyers or the sellers of a good or
service not reflected in prices. Buyers and sellers of goods that, when sold, result in positive
externalities, do not consider the fact that each unit produced provides benefits to others. For
example, a positive externality is likely to exist for fire prevention, because the purchase of
smoke alarms and fireproofing materials benefits those other than the buyers and sellers by
reducing the risk of the spread of fire. Buyers and sellers of these goods do not consider the fact
that such protection decreases the probability of damage to the property of third parties.
Fewer resources are devoted to fire prevention than would be the case if it were possible to
charge third parties for the external benefits that they receive.
INTERNALIZING EXTERNALITIES
How to Internalize Externalities?
Internalization of an externality occurs when the marginal private benefit or cost of goods and
services are adjusted so that the users consider the actual marginal social benefit or cost of their
decisions. In the case of a negative externality, the marginal external cost is added to marginal
private cost for internalization. For a positive externality, the marginal external benefit is added
to marginal private benefit to internalize the externality. Internalizing an externality result in
changes in prices to reflect full marginal social cost or benefit of a good. Internalization of
externalities requires identification of the individuals involved and measurement of the monetary
value of the marginal external benefit or cost. The data required for such identification and
measurement are often difficult to obtain. Economic policy toward externalities is sometimes
controversial because of strong differences of opinion concerning the actual value of the external
cost or external benefit. For example, how can all the sources of air pollution be identified? How
are damages done to property and personal well-being evaluated? This is a formidable scientific,
engineering, and economic detective problem. Because strong disagreement exists among
physical and biological scientists as to the costs of pollution, the necessary information required
for internalizing the externality can be elusive.
The simplest way this can be done is to internalize the externality by forming economic units of
sufficient size that most of the consequences of any action occur within the unit. Consider, for
instance, any community whether a group of neighboring houses or a set of apartments in the
same or neighboring buildings. The quality of life in the neighborhood is affected by how each
household maintains its property. If someone plants flowers, they confer a positive externality; if
they let their house nun down, they confer a negative externality. Even in cases where each
family owns their own apartment, the households may collectively decide that maintenance of
the facilities that affect them all-including the external appearance should be undertaken
collectively. They form a cooperative or a con dominium association. There must, of course, be
some way of enforcing the collective agreement (which those who purchase a condominium or
an apartment in a cooperative sign. A member of the condominium association might prefer to be
a free rider, not paying her share of the cost of the maintenance of the common facilities; or she
might refuse to maintain her apartment in ways that are collectively agreed upon and that
adversely affect neighboring apartments. There must be recourse to the legal system, which
ensures that the terms of the agreement by which those living near each other attempt to deal
with some of the externalities they impose upon each other and to provide what are "public
goods" to the group are adhered to.
Incorporation of an externality into the market decision making process through pricing or
regulatory interventions. In the narrow sense, internalization is achieved by charging polluters
(for example) with the damage costs of the pollution generated by them, in accordance with the
polluter pays principle.
2.8 Internalizing negative externalities through imposing tax
Public sector solution of environmental externalities falls into 2 categories. One is market-based
solution and another is direct regulation. Market based solutions refers to the attempt of
influence incentives to ensure economically efficient out comes. As an example, fines for
polluting can be used to with the true social cost (the amount of money people are willing to
receive as compensation for having to live in a community with dirtier air and dirtier water).
Direct regulations are the regulations that limit the externalities, as government’s regulations for
the standards about emission of automobiles.
Market based solution to environmental externalities have three categories:
 Fines & Taxes, subsidies for pollution abatement and market permits.
FINES AND TAXES
Fines and taxes are the simplest form of market-based solution which involves levying fees or
fines proportion to the amount of pollution emitted. Generally, whenever there is an externality,
there is a difference between social cost and the private cost, and between social benefit and
private benefit. A properly calculated fine or tax presents the individual or the firm with the true
social cost and benefits of its action. Fines of this sort are designed to make marginal private
costs equal marginal social costs, and marginal private benefits equal marginal social benefits.
These are often called corrective taxes or Pigouvian taxes. Firms can reduce pollution by
producing less or changing the production method. Fines related directly to the amount of
pollution ensure that firms will undertake the pollution abatement (technology applied or
measure taken to reduce pollution and/or its impacts on the environment) in the least costly and
most efficient manner possible.

This figure, we have assumed that the amount of pollution is proportional to the output and the
marginal cost of each unit of pollution is fixed; hence by imposing a fixed charge per unit of
output equal to the marginal social cost of pollution each firm will be induced to produce the
socially efficient level of output. In the figure the distance EA represents the pollution tax per
unit output and the area EABC represents the total pollution taxes paid.
Internalization of an externality occurs when the marginal private benefit or cost of goods and
services are adjusted so that the users consider the actual marginal social benefit or cost of their
decisions. In the case of a negative externality, the marginal external cost is added to marginal
private cost for internalization. For a positive externality, the marginal external benefit is added
to marginal private benefit to internalize the externality. Internalizing an externality result in
changes in prices to reflect full marginal social cost or benefit of a good. Internalization of
externalities requires identification of the individuals involved and measurement of the monetary
value of the marginal external benefit or cost. The data required for such identification and
measurement are often difficult to obtain. Economic policy toward externalities is sometimes
controversial because of strong differences of opinion concerning the actual value of the external
cost or external benefit. For example, how can all the sources of air pollution be identified? How
are damages done to property and personal well-being evaluated? This is a formidable scientific,
engineering, and economic detective problem. Because strong disagreement exists among
physical and biological scientists as to the costs of pollution, the necessary information required
for internalizing the externality can be elusive.
A corrective tax is designed to adjust the marginal private cost of a good or service in such a way
as to internalize the externality. The tax must equal the marginal external cost per unit of output
to achieve this objective. In effect, a corrective tax is exactly like a charge for emitting wastes. It
is designed to internalize a negative externality by making sellers of the product pay a fee equal
to the marginal external costs per unit of output sold.
2.9 Internalizing positive externalities through proving subsidies

A corrective subsidy is a payment made by government to either buyers or sellers of a good so

that the price paid by consumers is reduced. A corrective subsidy to consumers increases the
demand for inoculations and achieves the efficient output. After subsidy payments are received
by consumers, the net price of an inoculation falls to $10, inducing them to purchase the efficient
amount of 12 million per year. The area RVXY represents the total subsidy payments at the
efficient output must equal the marginal external benefit of the good or service. In this case, $20
is the marginal external benefit associated with each person inoculated. Suppose the government
announces that it will pay each person inoculated a subsidy of $20. This subsidy adds $20 to the
marginal private benefit of each inoculation. The demand curve for inoculations shifts upward
from D MPB to D MPB $20. As the demand for inoculations increases, the market equilibrium
moves from point U to point V in Figure 3.6. At that point, the market price of an inoculation
increases to $30 to cover increased marginal costs of production. However, the net price after
receiving the subsidy declines for consumers. The net price is now $30 $20 $10 per inoculation.
This reduction in the net price to consumers increases the quantity demanded to 12 million per
year, the efficient output. The effect of the subsidy is to increase the benefit of inoculations
accruing to those other than the buyers or the sellers of inoculations from $200 million per year
to $240 million per year ($20 per person inoculated multiplied by 12 million inoculations per
year). The government accomplishes this by making a total of $240 million in subsidy payments
to the 12 million people inoculated each year. This is represented by the area RVXY in Figure

3.6. The subsidy is paid from tax.

Examples of corrective subsidies include the provision of certain government services at levels
below the marginal cost of such services. For example, many municipal governments make
special pickups of trash and such large waste items as discarded furniture at prices well below
marginal cost. The difference between the actual price and the marginal cost of the pickup can be
regarded as a corrective subsidy designed to avoid accumulation of trash and unauthorized
dumping.
Governments often provide services that result in positive externalities free of charge and
establish minimum levels of consumption, as is commonly the case for elementary and
secondary schooling. However, not all subsidies are designed to internalize positive externalities.
Many subsidies are based on other goals, such as alleviating poverty. Governments often provide
services that result in positive externalities free of charge and establish minimum levels of
consumption, as is commonly the case for elementary and secondary schooling. However, not all
subsidies are designed to internalize positive externalities. Many subsidies are based on other
goals, such as alleviating poverty.
2.10 PROPERTY RIGHTS TO RESOURCE USE AND INTERNALIZATION OF
EXTERNALITIES
THE COASE THEOREM:
Externalities arise because the property rights of some resource users are not considered in the
marketplace by buyers or sellers of products. The willingness of people to engage in market
transactions involving property or goods and services depends on both the gains expected from
the transactions and the costs involved in acquiring those gains. Transactions costs include the
time, effort, and cash outlays involved in locating someone to trade with, negotiating terms of
trade, drawing contracts, and assuming risks associated with the contracts. Transactions costs
depend, in part, on property rights to use resources. Government has the power to change
property rights. By doing so, transactions costs will be affected, as will the potential net gains
realizable through market exchanges. If a government lowers trans-actions costs, efficiency will
be improved in cases for which new gains from trading outweigh the costs involved in
establishing or modifying preexisting property rights.
Governments can and have modified the right of business firms to emit wastes in the air and
water and can lower transactions costs involved in trading existing rights to dispose of wastes in
the environment.
For example, users of a lake or stream could be granted the right to unpolluted water. Suppose
an industrial firm can purchase the right to pollute from those who have been granted the right to
a pollution-free lake. If the firm’s owners can still be better off after purchasing the right to
pollute, and users better or at least no worse off than they would otherwise have been, a gain in
net benefits is possible. Provided that trans-actions costs of the exchange do not outweigh the net
benefits possible to the parties, exchange of these property rights will help achieve efficiency. By
establishing property rights and seeking to lower transactions costs associated with their
exchange, governmental authority can increase net benefits to citizens.
The Coase theorem states that governments, by merely establishing the rights to use resources,
can internalize externalities when transactions costs of bargaining are zero.5 Once these property
rights to resource use are established, the Coase theorem holds that free exchange of established
rights for cash payments among the affected parties will achieve efficiency. This result holds
irrespective of which of the involved parties is granted the right.
For example, suppose only two competing uses exist for a stream: a convenient place to dump
wastes from paper production and a site for recreation. Suppose the transactions costs of trading
established rights to use the stream between the paper factory and the recreational users of the
stream are zero. Under these circumstances, the Coase theorem maintains that it makes no
difference whether the factory is granted the right to pollute the stream or the recreational users
are given the right to a pollution-free stream.
The transactions costs of bargaining to exchange rights include the costs of locating a trading
partner and agreeing on the value of the traded right. In general, these transactions costs tend to
be close to zero when the parties involved in trading the right are few in number. Under such
circumstances, those who are granted a right are likely to know who (if anyone) is willing to
purchase it, and a price can easily be agreed upon to internalize any externality. Those who
purchase the rights of others to pollute, for example, know that no other polluters will continue to
cause damages after the deal is completed. The kinds of externalities for which the Coase
theorem is relevant are called small-number externalities. In dealing with externalities of this
type, or any externality for that matter, it is useful to divide the parties involved into two groups:
emitters and receptors. The distinction is, however, somewhat arbitrary because, as is shown
below, the emitter could as well be designated the receptor and the receptor could be considered
the emitter. The essential social problem that exists for any externality is the disputed use of a
productive resource.
 SUMMARY
There are some conditions where there are insufficient sufficient allocation of goods and services
exits, which is called market failure. There are some causes of market failure such as
externalities, public goods, market control, imperfect information, presence of merit and demerit
goods, carrot and stick policy etc. However, when market failure happens, a government can
always intervene and fix the failure by some direct provision, by regulating many external and
internal factor, imposing taxes, regulating the use of public goods, controlling market and
externalities and providing basic information to all. Public goods are available to all to use with
the feature of non-excludability and nonrivals. But is has free rider problem. It occurs when
people want to be benefited from public goods without paying. So, we all need efficient output of
public goods from a healthy economy. Efficiency means producing a desired result with a
minimum of effort or expense.
Market failure in economics is a situation when a faulty allocation of resources in a market. A
simple example of market failure is when a monopolist seller sets high rates to the products
leaving no choice for the buyers other than to purchase the overpriced goods.
Externalities are costs or benefits of market transactions not reflected in prices. When
externalities are present, market prices fail to equal the marginal social cost or benefit of goods.
Exchange of goods and services in an unregulated system of competitive markets fails to achieve
efficiency when externalities prevail. Externalities can be negative or positive. Negative
externalities result in costs, while positive externalities result in benefits to third parties of
market exchanges. To internalize an externality, the parties involved must be identified and the
marginal external cost or benefit must be measured.
In some cases, particularly that of few individual emitters and receptors, private action through
informal bargaining can be expected to internalize the externality without recourse to collective
action through political institutions. Government can have a role in correcting externalities.
Officials must correctly identify the existence and cause. The Coase theorem shows that, in such
cases, government assignment of rights to resource use, along with facilitation of free exchange
of those rights, achieves efficiency, independent of which party is granted the right. When larger
numbers of individuals are involved, a solution will require collective action to internalize the
externality. Among the techniques used for this are corrective taxes and subsidies, regulations,
and the establishment of standards.
 TEAM MEMBER INFORMATION

Team Squadron
SL No. Name ID
1 Abidul Islam 19303047
2 Samira Hossain Nipa 19303085
3 Hamed Hasan Samin 19303081
4 Shaily Nishar 19303126
5 Nahida Akter 19303105
6 Kamrul Hasan 19303041
7 Sneha Chowdhury 19303083
8 Md Shihab Hossain Chowdhury 19303078
9 Mahedul Hasan Reshad 19303110
10 Rafi Ahsan 19303098

Team Summit
SL No. Name ID
1 Ritu Sen 19303014
2 Rakib Hasan 19303016
3 Amdad Hossan 19303049
4 Mohsena Begum 19303088
5 Abhishek Paul 19303095
6 Md. Sharif Miah 19303101
7 Shahin Akter 19303109
8 Fatema Naznin Shetu 19303111

9 Chandraseker Sengupta 19303124

10 Imam Uddin 19303129
11 Ilrupa Habib 18303128