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№1 слайд![Public Goods and Common](/documents_6/46cc9dcf3506bfb5fe648686499682ac/img0.jpg)
Содержание слайда: 11
Public Goods and Common Resource
№2 слайд![The best things in life are](/documents_6/46cc9dcf3506bfb5fe648686499682ac/img1.jpg)
Содержание слайда: “The best things in life are free. . .”
Free goods provide a special challenge for economic analysis.
Most goods in our economy are allocated in markets…
№3 слайд![The best things in life are](/documents_6/46cc9dcf3506bfb5fe648686499682ac/img2.jpg)
Содержание слайда: “The best things in life are free. . .”
When goods are available free of charge, the market forces that normally allocate resources in our economy are absent.
№4 слайд![The best things in life are](/documents_6/46cc9dcf3506bfb5fe648686499682ac/img3.jpg)
Содержание слайда: “The best things in life are free. . .”
When a good does not have a price attached to it, private markets cannot ensure that the good is produced and consumed in the proper amounts.
№5 слайд![The best things in life are](/documents_6/46cc9dcf3506bfb5fe648686499682ac/img4.jpg)
Содержание слайда: “The best things in life are free. . .”
In such cases, government policy can potentially remedy the market failure that results, and raise economic well-being.
№6 слайд![THE DIFFERENT KINDS OF GOODS](/documents_6/46cc9dcf3506bfb5fe648686499682ac/img5.jpg)
Содержание слайда: THE DIFFERENT
KINDS OF GOODS
When thinking about the various goods in the economy, it is useful to group them according to two characteristics:
Is the good excludable?
Is the good rival?
№7 слайд![THE DIFFERENT KINDS OF GOODS](/documents_6/46cc9dcf3506bfb5fe648686499682ac/img6.jpg)
Содержание слайда: THE DIFFERENT
KINDS OF GOODS
Excludability
Excludability refers to the property of a good whereby a person can be prevented from using it.
Rivalry
Rivalry refers to the property of a good whereby one person’s use diminishes other people’s use.
№8 слайд![THE DIFFERENT KINDS OF GOODS](/documents_6/46cc9dcf3506bfb5fe648686499682ac/img7.jpg)
Содержание слайда: THE DIFFERENT
KINDS OF GOODS
Four Types of Goods
Private Goods
Public Goods
Common Resources
Natural Monopolies
№9 слайд![THE DIFFERENT KINDS OF GOODS](/documents_6/46cc9dcf3506bfb5fe648686499682ac/img8.jpg)
Содержание слайда: THE DIFFERENT
KINDS OF GOODS
Private Goods
Are both excludable and rival.
Public Goods
Are neither excludable nor rival.
Common Resources
Are rival but not excludable.
Natural Monopolies
Are excludable but not rival.
№10 слайд![Figure Four Types of Goods](/documents_6/46cc9dcf3506bfb5fe648686499682ac/img9.jpg)
Содержание слайда: Figure 1 Four Types of Goods
№11 слайд![PUBLIC GOODS A free-rider is](/documents_6/46cc9dcf3506bfb5fe648686499682ac/img10.jpg)
Содержание слайда: PUBLIC GOODS
A free-rider is a person who receives the benefit of a good but avoids paying for it.
№12 слайд![The Free-Rider Problem Since](/documents_6/46cc9dcf3506bfb5fe648686499682ac/img11.jpg)
Содержание слайда: The Free-Rider Problem
Since people cannot be excluded from enjoying the benefits of a public good, individuals may withhold paying for the good hoping that others will pay for it.
The free-rider problem prevents private markets from supplying public goods.
№13 слайд![The Free-Rider Problem](/documents_6/46cc9dcf3506bfb5fe648686499682ac/img12.jpg)
Содержание слайда: The Free-Rider Problem
Solving the Free-Rider Problem
The government can decide to provide the public good if the total benefits exceed the costs.
The government can make everyone better off by providing the public good and paying for it with tax revenue.
№14 слайд![Some Important Public Goods](/documents_6/46cc9dcf3506bfb5fe648686499682ac/img13.jpg)
Содержание слайда: Some Important Public Goods
National Defense
Basic Research
Fighting Poverty
№15 слайд![CASE STUDY Are Lighthouses](/documents_6/46cc9dcf3506bfb5fe648686499682ac/img14.jpg)
Содержание слайда: CASE STUDY: Are Lighthouses Public Goods?
№16 слайд![The Difficult Job of](/documents_6/46cc9dcf3506bfb5fe648686499682ac/img15.jpg)
Содержание слайда: The Difficult Job of Cost-Benefit Analysis
Cost benefit analysis refers to a study that compares the costs and benefits to society of providing a public good.
In order to decide whether to provide a public good or not, the total benefits of all those who use the good must be compared to the costs of providing and maintaining the public good.
№17 слайд![The Difficult Job of](/documents_6/46cc9dcf3506bfb5fe648686499682ac/img16.jpg)
Содержание слайда: The Difficult Job of Cost-Benefit Analysis
A cost-benefit analysis would be used to estimate the total costs and benefits of the project to society as a whole.
It is difficult to do because of the absence of prices needed to estimate social benefits and resource costs.
The value of life, the consumer’s time, and aesthetics are difficult to assess.
№18 слайд![COMMON RESOURCES Common](/documents_6/46cc9dcf3506bfb5fe648686499682ac/img17.jpg)
Содержание слайда: COMMON RESOURCES
Common resources, like public goods, are not excludable. They are available free of charge to anyone who wishes to use them.
№19 слайд![COMMON RESOURCES Common](/documents_6/46cc9dcf3506bfb5fe648686499682ac/img18.jpg)
Содержание слайда: COMMON RESOURCES
Common resources are rival goods because one person’s use of the common resource reduces other people’s use.
№20 слайд![Tragedy of the Commons The](/documents_6/46cc9dcf3506bfb5fe648686499682ac/img19.jpg)
Содержание слайда: Tragedy of the Commons
The Tragedy of the Commons is a parable that illustrates why common resources get used more than is desirable from the standpoint of society as a whole.
Common resources tend to be used excessively when individuals are not charged for their usage.
This is similar to a negative externality.
№21 слайд![Some Important Common](/documents_6/46cc9dcf3506bfb5fe648686499682ac/img20.jpg)
Содержание слайда: Some Important Common Resources
Clean air and water
Congested roads
Fish, whales, and other wildlife
№22 слайд![CASE STUDY Why Isn t the Cow](/documents_6/46cc9dcf3506bfb5fe648686499682ac/img21.jpg)
Содержание слайда: CASE STUDY: Why Isn’t the Cow Extinct?
Will the market protect me?
№23 слайд![CONCLUSION THE IMPORTANCE OF](/documents_6/46cc9dcf3506bfb5fe648686499682ac/img22.jpg)
Содержание слайда: CONCLUSION: THE IMPORTANCE OF PROPERTY RIGHTS
The market fails to allocate resources efficiently when property rights are not well-established (i.e. some item of value does not have an owner with the legal authority to control it).
№24 слайд![CONCLUSION THE IMPORTANCE OF](/documents_6/46cc9dcf3506bfb5fe648686499682ac/img23.jpg)
Содержание слайда: CONCLUSION: THE IMPORTANCE OF PROPERTY RIGHTS
When the absence of property rights causes a market failure, the government can potentially solve the problem.
№25 слайд![Summary Goods differ in](/documents_6/46cc9dcf3506bfb5fe648686499682ac/img24.jpg)
Содержание слайда: Summary
Goods differ in whether they are excludable and whether they are rival.
A good is excludable if it is possible to prevent someone from using it.
A good is rival if one person’s enjoyment of the good prevents other people from enjoying the same unit of the good.
№26 слайд![Summary Public goods are](/documents_6/46cc9dcf3506bfb5fe648686499682ac/img25.jpg)
Содержание слайда: Summary
Public goods are neither rival nor excludable.
Because people are not charged for their use of public goods, they have an incentive to free ride when the good is provided privately.
Governments provide public goods, making quantity decisions based upon cost-benefit analysis.
№27 слайд![Summary Common resources are](/documents_6/46cc9dcf3506bfb5fe648686499682ac/img26.jpg)
Содержание слайда: Summary
Common resources are rival but not excludable.
Because people are not charged for their use of common resources, they tend to use them excessively.
Governments tend to try to limit the use of common resources.