曼昆微观经济学英文版11public-goods.pptVIP

11 Public Goods and Common Resource “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… “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. “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. “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. 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? 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. THE DIFFERENT KINDS OF GOODS Four Types of Goods Private Goods Public Goods Common Resources Natural Monopolies 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. Figure 1 Four Types of Goods PUBLIC GOODS A free-rider is a person who receives the benefit of a good but avoids paying for it. 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. 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 gove