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Submitted by Shanta on

Gautam: Thanks for the perceptive comments. On education, I know lots of scholars argue that there are externalities, but the empirical evidence is rather thin. And even if there were some externalities (especially in primary education, for which there is some evidence), it is still the case that there is a huge private benefit to education as well. So the government should subsidize education only to the extent of the difference between the social and private benefit, not the whole thing.
On orphan drugs, you are right that there may be a market failure, but this is in the research and production of the drugs. There is then a case for government subsidizing the research, as I believe they do. It doesn't follow that government should also subsidize the provision of these drugs to rich and poor alike. Shanta