2.7.3—Consequences of intervention

Intervention can change price, quantity, surplus, government revenue, inequality and deadweight loss.

Incidence depends on elasticities and enforcement; intended and unintended effects may differ across groups and time.

Map the new outcome and compare efficiency, equity and feasibility.

A per-unit tax raises buyer and seller prices differently depending on relative elasticity.

A policy can improve one objective while worsening another.