ECON-221 Lecture Notes - Lecture 25: Private Good, Marginal Cost, Excludability
13 Oct 2020
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Document Summary
Can exclude others from consumption: common pool goods goods and services that are rivalrous in consumption and are non- excludable. Overuse results from failure to regulation e. g. water reserves, fish stocks in ocean. Common property and quota systems are adopted to avoid tragedy of the commons : collective goods goods and services that are non-rivalrous and excludable. Since marginal cost is 0, excluding viewers is wasteful. Concept of rivalry refers to goods that can be made available to additional consumers at zero cost. Thus, only costs involved in making goods are those entailed in distribution: public goods goods and services that are both non-rivalrous and non-excludable. Pure public goods consumption creates a one-to-one reduction in the good"s availability to others and are easily excludable. Quasi public goods describe goods displaying elements of non-rivalry and non- excludability: rethinking the public good private good divide. Technological change, privatization and globalization enabled markets to expand.
