POLS 015B Lecture Notes - Lecture 1: Fossil-Fuel Power Station, Market Concentration, Voluntary Association
4 Jun 2018
School
Department
Course
Professor
Government: “ The institutions and political processes through which public policy choices are
made”
Public Policy: “ what the government chooses to do”
Mon 29 2018
Modern state of nature
Markets are the state of nature= the default
→ When do markets fail?
When it does not apply the allocation of efficiency and resources
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Hw: assignment #1
Politicalcompass.org and take the quiz w/ 500 word reflection
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Review from last class:
Government intervene because it is moral and ethical to do so, Economically needed and
political right
→ economically: there is no market without government
Someone should enforce contracts
Bitcoin: currency not backed by anyone
Markets:
Without government provision of services and goods, all services and goods would be provided
by the market
→ The market is incredibly efficient
→ Biggest money makers: oil and coffee
Market Failure:
When market economy does not provide goods and services efficiently
Causes:
Monopolies and oligopolies
→ A monopoly controls a lot of businesses that have no competition b/c they own all of
them
What is harmful about a monopoly is that it flies in the face of competition
In a monopoly they set the price @ whatever they want
EX: amazon buys whole foods
*Monopsony: There is only one or very few buyers
→ less devastating, and rare, almost always the government
National defense
find more resources at oneclass.com
find more resources at oneclass.com
Natural monopoly → PG&E
Oligopolies: Small firms control a huge deal, they choose not compete with each other
Market concentration: where companies somewhat merge when competition
lowers
Externalities
→ The market is not equipped to impose the full cost of something on the correct parties
Negative externality: a coal power plant does not have to pay the cost of environmental
destruction- things seem cheaper than they should be
EX: Pollution
→ yet you have to deal with the negativity of breathing in the smog
Positive externality: the progenitor of a new idea of tech is not fully compensated for their
insight
Info Failure
→ Uncertainty about the true value or quality of a good or service makes transactions
risky
→ In any given situation some people know more salient info than others- they can
exploit that for additional profit
If people can not be dure what they are buying or who they’re hiring is of a
sufficiently high quality, economic activity can grind to a halt
Information Asymmetry: The seller knows the true value of a product, while the seller might and
could be ripped off.
→ info failures represent an existential threat to markets
Public or collective goods
→ non excludable and non rivalrous
Free rider problems
→ the example of paying for the army when they call to support them.
Your neighbor might pay but it doesn’t mean your house would be
protected
“Tragedy of the commons”
find more resources at oneclass.com
find more resources at oneclass.com
Ex: natural defense → You don’t pay for it
We will be underfunding our national defense
Formal or informal governance→ to collectively agree that we will not pull someone else’s
lobsters
Why are public goods a market failure?
→ Public goods have a tremendous value.
→ market is not equipped to capitalize on that value
Mon. Feb. 5
What is political ideology?
AN ideology begins with the belief that the state of society can be better; it is a plan to improve
society by following certain doctrines
Meliorism: to ease, to make better/ improves
→ opposite of naturalism
→ can make the world a better place
Placing a y-axis you are able to add onto the differences between Gandhi and democrats, and
Pinochet and Republicans.
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
When it does not apply the allocation of efficiency and resources. Government: the institutions and political processes through which public policy choices are made . Public policy: what the government chooses to do . Markets are the state of nature= the default. Politicalcompass. org and take the quiz w/ 500 word reflection. Government intervene because it is moral and ethical to do so, economically needed and political right. Economically: there is no market without government. Without government provision of services and goods, all services and goods would be provided by the market. When market economy does not provide goods and services efficiently. A monopoly controls a lot of businesses that have no competition b/c they own all of them. What is harmful about a monopoly is that it flies in the face of competition. In a monopoly they set the price @ whatever they want. *monopsony: there is only one or very few buyers.
