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hello and welcome to the first lesson on subsidies in this session were going to have a look at what theyre used for the types of market failure they are used to correct and exactly what they are were going to have a look at a proper definition so first of all time to think so i want you to write down for each of the following causes of market failure two things you know about each of those market failures it could be that that causes under consumption over consumption or maybe something about a market where we typically see these types of market failures if you pause the video and then replay when youre ready we can compare answers so hopefully youve got something in each of the boxes lets have a look and see how your answers compare to mine so lets start with information gaps information gaps is where one party to the transaction has a lot more information than the other we often think about merit goods and due to a lack of information we dont realize just how beneficial the