公共部门经济 lecture No.5 Ch.3.ppt

Economics of the Public Sector Chongjin Wang Email: wangchjin@126.com review 1,Failure of competition Where is the monopoly power from? There are barriers to entry arising from what economists refer to as increasing returns to scale. When a firm has attained its monopoly position as a result of increasing returns to scale, we say that it is a natural monopoly. Why is it then that monopolies are generally viewed as bad? Monopoly pricing and the welfare loss from monopoly 2,Public goods Non-rival Non-excludable 3,Externalities 3,Externalities There are many cases where the actions of