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Public Goods Common Resources People Search公共产品和公共资源人们搜索
Public Goods Common Resources ECO 230 J.F. O’Connor Goals Classify goods What is the problem with using the market to provide public goods? Optimal production of a public good The free-rider problem in the provision of public goods Methods of funding the provision of public goods The problem of the commons and some solutions Different Kinds of Goods Clay’s Ferry Bridge Cable TV WEKU - Public radio National Defense Bread Fire protection Public education Important Characteristics of Goods Excludability - it is possible to exclude a person from consuming the good Rivalous - one person’s consumption of a unit of the good precludes anyone else from consuming that unit Which goods in the previous list have these properties? Nonrivalous and Nonexcludable Nonrivalous good A good whose consumption by one person does not reduce the amount available for others Nonexcludable good A good that is difficult or costly to prevent free riders from consuming it Classifying Goods Public Goods The ultimate positive externality! If I (or Bill Gates) buy a unit of national defense, it helps protect all people in the country but I (Bill) take account only of the marginal benefit to me (Bill) The benefit to society is the sum of the benefits to all individuals. For an efficient solution, we should compare the sum of the benefits with the marginal cost. The Market and Public Goods Market solution compares the marginal benefit to one person with marginal cost, while ignoring the benefits to others. Since it undervalues the good, the market solution will usually result in less of the public good being provided than is socially efficient. Demand for Private vs. Public Goods Private goods Different individuals are free to consume whatever quantity and quality they choose to buy Summed horizontally Public goods Jointly consumed goods that must be provided in the same quantity and quality for all persons Summed vertically (due to nonrival) Fig. 15.1 Generating the Market Demand Curve for
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