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Public Goods and Common Resources<br />Blake<br />Paul<br />5th hr<br />
Characteristics of goods<br />Excludability- The property of a good whereby a person can be prevented from using it.<br />...
Four Categories of Goods<br />Private Goods- excludable and rival<br />Ex. Food<br />Public Goods- neither excludable nor ...
Public Goods<br />Public Goods are difficult to provide because of the free rider problem<br />Free Rider: Someone who get...
Is a lighthouse a public Good; the lighthouse debate.Public Goods cont.<br />If a light house benefits many ship captains ...
Problems and Solutions with Public Goods<br />Problem: Free Riders; companies cannot prevent people from using it<br />Sol...
Cost Benefit Analysis<br />Cost Benefit Analysis-A study that compares the costs and benefits to a society providing a pub...
Cost Benefit Example<br />A streetlight may be valued at $1,000 by each of the 10 house owners in a neighborhood. If the c...
Common Resources<br />Examples: Clean air, water, wildlife.<br />When one person uses a common resources he diminishes oth...
Solutions for Common Resources<br />Regulate use of the resource<br /> Impose a corrective tax to internalize the external...
Tragedy of the Commons<br />A parable that illustrates why common resources get used more than is desirable from the stand...
Other Notes<br />Public goods and common resources create positive and negative externalities.<br />Subsidies are used to ...
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Public Goods and Common Resources (By Blake and Paul)

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Public Goods and Common Resources (By Blake and Paul)

  1. 1. Public Goods and Common Resources<br />Blake<br />Paul<br />5th hr<br />
  2. 2. Characteristics of goods<br />Excludability- The property of a good whereby a person can be prevented from using it.<br />Excludable good include wireless internet and access to a movie<br />Not excludable goods include the radio and a public beach<br />Rivalry-The property of a good whereby one persons use diminishes other peoples use.<br />Rival goods include apples and water<br />Goods that are not rival include songs and tv shows<br />
  3. 3. Four Categories of Goods<br />Private Goods- excludable and rival<br />Ex. Food<br />Public Goods- neither excludable nor rival<br />Ex. fireworks<br />Common Resources-rival, but not excludable<br />Ex. Fish in the ocean<br />Natural Monopoly-excludable, but not rival<br />Ex. Cable TV<br />
  4. 4. Public Goods<br />Public Goods are difficult to provide because of the free rider problem<br />Free Rider: Someone who gets the benefit from an object without paying for it<br />Examples: Fireworks, Snow Removal, National Defense, Research.<br />
  5. 5. Is a lighthouse a public Good; the lighthouse debate.Public Goods cont.<br />If a light house benefits many ship captains ,like myself, it is a public good. If it benefits a single port owner, it is more like a private good.<br />
  6. 6. Problems and Solutions with Public Goods<br />Problem: Free Riders; companies cannot prevent people from using it<br />Solution: Companies don’t provide the product or they will be subsidized to provide it. <br />
  7. 7. Cost Benefit Analysis<br />Cost Benefit Analysis-A study that compares the costs and benefits to a society providing a public good.<br />When government decides whether to provide public good they use this strategy. Ex: roads<br />Public Goods are related to positive externalities. People ignore external benefits when deciding whether to provide a good for themselves.<br />Measuring the value of an object is usually very difficult<br />
  8. 8. Cost Benefit Example<br />A streetlight may be valued at $1,000 by each of the 10 house owners in a neighborhood. If the cost is $5,000, no individual will buy a streetlight because no one can sell the light to their neighbors for $1000 each: they can enjoy the light whether they pay or not.<br />If the benefit is more than the cost of providing then government should provide the good and tax people who benefit<br />
  9. 9. Common Resources<br />Examples: Clean air, water, wildlife.<br />When one person uses a common resources he diminishes other peoples enjoy of it, therefore, common resources tend to be used excessively.<br />Free rider problem still exists<br />Companies are given little incentive to provide the resource<br />Pieming shoots an alluring look towards his favorite microeconomic topic, Common Resources<br />
  10. 10. Solutions for Common Resources<br />Regulate use of the resource<br /> Impose a corrective tax to internalize the externality (pigovian tax) <br />example: hunting & fishing licenses, entrance fees for congested national parks<br /> Auction off permits allowing use of the resource <br />example: spectrum auctions by the<br />
  11. 11. Tragedy of the Commons<br />A parable that illustrates why common resources get used more than is desirable from the standpoint of society as a whole.<br />James hates deforestation<br />
  12. 12. Other Notes<br />Public goods and common resources create positive and negative externalities.<br />Subsidies are used to internalize the externality.<br />WOW this great power point totally caught me by surprise<br />

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