ECN 104 Chapter 11: Chapter 11 - Public Goods and Common Resources

• School: Ryerson University
• Department: Economics
• Course: ECN 104
• Professor: Tsogbadral Galaabaatar

Document Summary

we consume many goods without paying: parks, national defense, clean air & water. when goods have no prices, the market forces that normally allocate resources are absent. the private market may fail to provide the socially efficient quantity of such goods. one of the ten principles from chapter 1: a good is excludable if a person can be prevented from using it. not excludable: fm radio signals, national defense. a good is rival in consumption if one person s use of it diminishes others use. An mp3 file of tom waits latest single. this chapter focuses on public goods and common resources. for both, externalities arise because something of value has no price attached to it. so, private decisions about consumption and production can lead to an inefficient outcome. public policy can potentially raise economic well-being.