nicholson微观经济理论（答案+PPT+习题库）-ch20.pptVIP

Chapter 20 EXTERNALITIES AND PUBLIC GOODS Externality An externality occurs whenever the activities of one economic agent affect the activities of another economic agent in ways that are not reflected in market transactions chemical manufacturers releasing toxic fumes noise from airplanes motorists littering roadways Interfirm Externalities Consider two firms, one producing good x and the other producing good y The production of x will have an external effect on the production of y if the output of y depends not only on the level of inputs chosen by the firm but on the level at which x is produced y = f(k,l;x) Beneficial Externalities The relationship between the two firms can be beneficial two firms, one producing honey and the other producing apples Externalities in Utility Externalities can also occur if the activities of an economic agent directly affect an individual’s utility externalities can decrease or increase utility It is also possible for someone’s utility to be dependent on the utility of another utility = US(x1,…,xn;UJ) Public Goods Externalities Public goods are nonexclusive once they are produced, they provide benefits to an entire group it is impossible to restrict these benefits to the specific groups of individuals who pay for them Externalities and Allocative Inefficiency Externalities lead to inefficient allocations of resources because market prices do not accurately reflect the additional costs imposed on or the benefits provided to third parties We can show this by using a general equilibrium model with only one individual Externalities and Allocative Inefficiency Suppose that the individual’s utility function is given by utility = U(xc,yc) where xc and yc are the levels of x and y consumed The individual has initial stocks of x* and y* can consume them or use them in production Externalities and Allocative Inefficiency Assume that good x is produced using only good y according to xo = f(yi) Assume that the output of good y depends on bot