PLAN103 Lecture 7: PLAN 103—Lecture
21 Dec 2016
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Why a government might provide a good or service? (opposed to the private sector) Equity: accountability -- may not want a private sector to provide funding i. e. military, police, etc, democracy. Price it at the cost to maintain it. Property tax good to use when there is benefits to everyone. Pricing to ration time (i. e. ice rink purchase specific time intervals) Peak demand times pricing more for busy times. Price rationing mechanism for the demand to spread itself out evenly. i. e. electricity time of use pricing. Quantity we will charge people on how much they produce. Consumption increase at certain level: by reducing production, you are saving the environment and reducing costs. Try not to distort society: deal with the inequality through the income distribution. Externality: the price you pay for is not the price it costs. Consequences to certain consumption of products or goods that(cid:495)s not taken into consideration into the cost.
