EC120 Chapter Notes - Chapter 11: Poverty Reduction, Environmental Quality, Externality
30
EC120 Full Course Notes
Verified Note
30 documents
Document Summary
Is a good excludable: can a person be prevented from accessing it, environmental quality, national defence, others are less clear, ex. Issues of human rights: are a legal system, drinking water, health care etc. legally excludable, practicality of excludability is an issue can people be prevented from fishing. Is the good rival in consumption: does the use of the good by one person limit use/value by others, fire protection, radio/tv broadcasts, creation of new technology. Private goods: excludable, rival, food, clothes, most goods in society. Public goods: non-excludable, non-rival, national defence, poverty reduction, provision likely involves a positive externality. Common resources: rival, non-excludable cost of exclusion, environmental damage, fishing, national parks, use involves a negative externality. Natural monopolies: excludable but (effectively) non-rival, drinking water, electricity networks. The free-rider problem (cid:862)a perso(cid:374) (cid:449)ho re(cid:272)ei(cid:448)es the (cid:271)e(cid:374)efit of a good (cid:271)ut a(cid:448)oids payi(cid:374)g for it(cid:863) We are all free-riders by this definition. Private actors will not supply sufficient quantities.
