第18 外部性与公共物品.pptVIP

112 113 114 117 117 119 120 121 122 123 124 1 62 65 67 68 69 70 75 80 81 82 84 85 87 88 89 90 91 92 93 94 98 99 98 100 101 102 105 106 107 108 109 110 Chapter 18 Slide * Determining the Levelof Educational Spending Educational spending per pupil $0 Willingness to pay $ $1200 $600 $1800 $2400 W1 W2 W3 AW Will majority rule yield an efficient outcome? W1 will vote for $600 W2 and W3 will vote for $1200 The median vote will always win in a majority rule election. Chapter 18 Slide * Question Will the median voter selection always be efficient? Answer If two of the three preferred $1200 there would be overinvestment. If two of the three preferred $600 there would be underinvestment. Private Preferences for Public Goods Chapter 18 Slide * Majority rule is inefficient because it weighs each citizen’s preference equally---the efficient outcome weighs each citizen’s vote by his or her strength of preference. Private Preferences for Public Goods Chapter 18 Slide * Summary There is an externality when a producer or a consumer affects the production or consumption activities of others in a manner that is not directly reflected in the market. Pollution can be corrected by emission standards, emissions fees, marketable emissions permits, or by encouraging recycling. Chapter 18 Slide * Summary Inefficiencies due to market failure may be eliminated through private bargaining among the affected parties. Common property resources are not controlled by a single person and can be used without a price being paid. Chapter 18 Slide * Summary Goods that private markets are not likely to produce efficiently are either nonrival or nonexclusive. Public goods are both. A public good is provided efficiently when the vertical sum of the individual demands for the public good is equal to the marginal cost of producing it. Chapter 18 Slide * Summary Under majority rule voting, the level of spending provided will be that preferred by the median voter---this need not be the efficient outcome. End