DEMERIT GOODS
Demerit goods: goods which are over produced in a free market.
Examples:
cigarettes, alcohol, drugs, pornography
These goods can be overprovided in a free market because:
a) incomplete information: the individual user is unaware
of the effect consumption of the good is having on themselves
b) negative externalities: consumption of these goods imposes harmful
effects on others
Government intervention is needed to reduce the consumption of these goods