Market Effects are the result of changes in the local incentive structures and patterns of opportunity caused by the introduction of new resources. The new resources noticeably affect incomes, wages, profits, and prices so that people’s perception of economic winners and losers changes.

Incomes

Interventions can flood areas and local markets with cheap or free substitutes that compete directly with local products. A glut of supply causes prices to fall and the incomes of those who relied on selling that good will fall as well.

Damaging local incomes is the opposite of what development intends to do. People thrown out of work will find alternatives. In some contexts, these alternatives can be violent or criminal. Generally, people prefer to avoid these alternatives. In addition, opportunities to leave violent or criminal jobs are often sought by those who feel pushed into them.

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Related Topics
Market Effects on Profits
Market Effects on Prices
Why do negative Market Effects happen?
Using Market Effects
Resource Transfers
Critical Detail: Resources—What do we provide?