AREC 202 Lecture Notes - Monster Energy, Excludability, Free Rider Problem
25 Mar 2014
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Rivalry the consumption decisions by one individual affect another"s ability to consume. E. g. if i drink monster energy drink, you can"t drink that one. Excludability one individual can put up barriers to prevent others from consuming. Please do not confused common goods and public goods. A guy has a cow he wants to put on the field so it can eat and grow. This guy will continue to add cattle until mb = mc. They all use fields until their mb = their mc. The second rancher imposes costs on the first rancher. The first rancher gets screwed, second rancher doesn"t care. If common good, it will tend to be over-consumed. What you do with them doesn"t affect anybody. To consume it, we just stand around living. As a result, public goods tend to be under-provided. Because the goods are non-rival, both can use a trail at the same time. Demand curves are added vertically for public goods.
