ECON-221 Lecture Notes - Lecture 24: Club Good, Externality
Document Summary
Excludable: the good must be purchased before use. Someone has the ability to receive the benefit of a good without paying for it. Eating at a free will donation meal. Letting classmate get all the work for a group prject. Process to determine whether the benfits of proving a public good outweighs the costs. Difficulty to quantify, different for all people. Benefits and willingness to pay are expressed through prices, easier to examine. Occurs when a rival (but non-excludable) good becomes. Original example: cattle grazing, commons=shared area that all cattle farmers get to use to et cattle graze. Incentive to neglect: good cannot be protected, no political borders or ownership. Incentive to overuse: each wants to fish as much as possible for higher profits. If one conserves others will fish even more. Incentive to ignore others: no one has the ability to dine how much resources can be used.
