The main point here is to illustrate the potential welfare losses that can arise if markets are incomplete.

The crosshatched trapezoid is the welfare loss to these mailers as a market, given that they cannot shift.

The result of this is a welfare loss.

Inevitably, welfare losses are experienced by each of these two individuals.

It is evident that the greater the difference in tastes and preferences, the greater the welfare losses.

As in other cases, the deadweight welfare loss depends on the price elasticity of demand.

Therefore, the net welfare loss due to the tariff is equal to:

Also, an efficient transit system can decrease the economic welfare loss caused by the increase of population density in a metropolis.

A possible exception to this general conclusion of welfare loss from collusion was provided by Richardson (1965).

The resulting market power will generate static welfare losses.