| Social B/C analysis | Private/Commercial B/C analysis |
- It takes the view point of the society as a whole.
| - It takes the view point individual participants or organization.
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- In social benefit cost analysis taxes and subsides are treated as transfer payment.
| - In private benefit cost analysis taxes are treated as costs and subsides are treated as income.
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- In this case normal market prices are not used because market prices don’t always reflect the social values
| - In this case normal market prices are used.
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- This analysis includes the pricing mechanism which works in such a way that profits are not a reasonable measures of net benefits.
| - Pricing policy always aims at maximizing total profits and minimizing total costs.
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- This analysis takes externalities into the account.
Social b/c = Private b/c + Externalities | - It does not take externalities into account.
Private b/c = Social b/c - Externalities |
