externality is a cost or benefit that falls on parties outside a transaction. The buyer and seller do not bear — or do not capture — the full social impact. Negative...
The core idea
externality is a cost or benefit that falls on parties outside a transaction. The buyer and seller do not bear — or do not capture — the full social impact. Negative...
Connected
Mental Model
Mental ModelAsymmetric Payoffs
situations where the upside is uncapped and the downside is limited. The expecte
Mental Model
Mental ModelBarriers to Entry
obstacles preventing new competitors from entering a market.
Mental Model
Mental ModelCollective Action Problem
incentives to free-ride undermine cooperation for shared benefit.
Mental Model
Mental ModelComparative Advantage
where your opportunity cost is lowest, not where you are best.
Mental Model
Mental ModelCreative Destruction
destroys established industries to create new, more valuable ones.
Mental Model
Mental ModelEconomies of Scale
scale drives lower unit costs, creating compounding cost advantages.