Deadweight loss can be thought of a surplus that is transferred from producers or consumers and given to :

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BlackTom AI · Accepted Answer

Beginning with a broad view, deadweight loss arises from market inefficiency where the total surplus (area under the demand and supply curves) is reduced and not captured by any participant in the economy.
Option a: The government. While government may collect taxes or tariffs that alter market outcomes, deadweight loss itself is not a transfer of surplus to the government. Instead, it reflects lost welfare that neither producers nor consumers enjoy, and it does not create a net gain for the government in the standard analysis of DWL.
Option b: Competitors in other markets. DWL is not a redistribution of surplus to rival firms in different markets. In fact, the presence of DWL means that some potential gains from trade are never realized, so there isn’t a clean transfer of surplus to competitors; the overall social welfare declines.
Option c: Taxpayers. Although taxpayers fund government activities, DWL specifically refers to the inefficiency-induced loss in total surplus, not a direct transfer of surplus to taxpayers. The concept is about the net reduction in welfare, not a reallocation of existing surplus to a taxpayer group.
Option d: Nobody. This is the standard interpretation: the loss in total surplus is not received by any particular group in the economy. It represents welfare that is lost due to the tax, subsidy, price control, or other market distortion, and it does not flow to a concrete beneficiary.
In summary, the core idea of deadweight loss is that the inefficiency creates a reduction in total welfare that is not gained by government, competitors, or taxpayers, but is effectively lost to the economy as a whole.

Deadweight loss can be thought of a surplus that is transferred from producers or consumers and given to :

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