Glossary

10 terms every policy reader should know.

Plain-language definitions with real policy examples: from price ceilings to regulatory capture.

D

Deadweight Loss

Economic value destroyed when a transaction that both parties would have preferred does not occur.

E

A cost or benefit that falls on a third party not involved in a market transaction.

M

A market with a single buyer (or, in labor markets, an employer with wage-setting power).

When insulation from risk causes people to take more risks than they otherwise would.

When unregulated market outcomes are inefficient or harmful to social welfare.

P

A legal maximum price set below the market-clearing price.

Price Elasticity

How much quantity demanded or supplied changes in response to a price change.

R

Using political or regulatory processes to extract wealth rather than create it.

Regulatory Capture

When a regulatory agency serves the interests of the industry it regulates rather than the public.

T

Who actually bears the economic burden of a tax, regardless of who legally pays it.