ECN 104 Lecture Notes - Lecture 11: Deadweight Loss, Pigovian Tax, Marginal Utility
18 May 2016
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Ecn 104 chapter 17 public goods and common resources march 30th. In each case there is a basic difference in the characteristics of the goods involved. Bathroom appliances and wheat have the characteristics needed to allow markets to work efficiently; sewage systems and fish in the sea do not. Let"s look at these crucial characteristics and why they matter. Characteristics of goods: goods can be classified according to two attributes: Why markets can supply only private goods efficiently: goods that are both excludable and rival in consumption are private goods. If a positive price is charged to compensate producers for the cost of production, the result is inefficiently low consumption. (remember the exam question about the bridge toll). Public goods: a public good is the exact opposite of a private good: it is a good that is both nonexcludable and nonrival in consumption, here are some other examples of public goods:
