Lecture 17

Lecture 17 - Chapter 16: Public Goods and Tax Policy Next...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
1 • Next exam: Wed Feb 27 • Will cover Chapters 14-16 only • Same format as first exam • Final exam will be cumulative (Chapters 5 and 12-20) • Second practice exam reviewed in discussion sections beginning today Chapter 16: Public Goods and Tax Policy A. Tragedy of the Commons B. Definitions of public and private goods nonrival : my consumption doesn’t reduce yours nonexcludable : I can’t be prevented from consuming public : nonrival and nonexcludable (e.g., clean air) private : rival and excludable (e.g., hamburger) common resource (hybrid): rival and nonexcludable (e.g., fish in ocean) collective good (hybrid): nonrival and excludable (e.g., pay-per-view TV) Chapter 16: Public Goods and Tax Policy A. Tragedy of the commons B. Definitions of public and private goods C. Valuing public goods private good: total marginal benefit curve is horizontal summation of individual marginal benefit curves public good: total marginal benefit curve is vertical summation of individual marginal benefit curves Chapter 16: Public Goods and Tax Policy A. Tragedy of the commons B. Definitions of public and private goods C. Valuing public goods D. Problem with private provision of public goods– too little produced E. Public provision of public goods 1. How political competition might achieve the social optimum
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
2 Social optimum: maximize TB – TC (or set MB = MC) Optimum: 2 satellites Hawks: would like 4 satellites (net benefit = 0) Doves: would like 1 satellite (net benefit = $15 B) Public rational: knows that 2 satellites (NB = $20 B) would be best If Hawks offer 4 satellites and Doves offer 1, public will
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 03/21/2009 for the course ECON 2 taught by Professor Kim during the Spring '08 term at UCSD.

Page1 / 7

Lecture 17 - Chapter 16: Public Goods and Tax Policy Next...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online