When a positive externality exists in an unregulated market, the marginal benefit (demand) curve of the body making the decision is less than the marginal benefit (supply) curve to society. In an unregulated market, consumers pay a lower price and consume less quantity than the socially-efficient outcome if positive externality exists. Subsidies increase the marginal benefit consumers receive when they consume the subsidized good. It seems to me that government regulation prevents concentration of capital. How would monopolies be avoided without government intervention? How would social programs be paid for without progressive taxation? I don't believe in the peacock effect; I believe that human avidity is an continual incentive, and resource clustering can reach indestructible levels. Like playing poker, the game continues as long as there's chips on the table. When most people lose their chips, and the game is rigged so that those with the most chips get more, free market capitalism is destroyed as the chip holders become "too big to fail". This is when capitalism, and even democracy, is destroyed.