Economics · Allocation Function and Market Failures

Arrange the following events in the logical sequence describing the operation of the allocation function of the budget in the context of demerit goods, starting from the identification of the market failure: 1. Identification of demerit goods that generate negative externalities 2. Imposition of corrective budgetary instruments like excise duties or sin taxes 3. Increase in the effective market price of the targeted demerit goods 4. Reduction in the consumption and production of the demerit goods 5. Correction of market failures and achievement of allocative efficiency