D

Damage compensation: see indifference criterion of perfect compensation. Damages: see compensatory damages. Danger in numbers: see safety in numbers versus danger in numbers. Deadweight loss: this identifies the loss of economic surplus that occurs when the market equilibrium is not Pareto-optimal. The deadweight loss can entail a loss of both consumer surplus and producer surplus. In other words, it can occur when some consumers are willing to pay higher than the marginal cost of producing the good and would benefit from the consumption of the good. It can also occur when firms have a marginal cost lower than the quoted price on the market and would benefit from selling additional units of the good. A deadweight loss may arise from conditions such as monopoly pricing (in which case the deadweight loss is measured by Harberger’s triangle), oligopoly pricing, price discrimination, government intervention in the form of taxes, subsidies, binding price ceilings or floors, and externalities. See also Harberger’s triangle, producer surplus, consumer surplus, and fundamental theorems of welfare.