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scan0002 - 0 Government taxes and subsidies intended to...

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Unformatted text preview: 0 Government taxes and subsidies intended to bring about an efficient level of output in the presence of externalities. o COMAND AND CONTROL APPROACH 0 Government imposed quantitative limits on the amount of pollution firms are allowed to generate, or government required installation by firms of specific pollution control devices. Rivalry and Excludability . RIVALRY o The situation that occurs when one person’s consuming a unit of a good means no one else can consume it. . EXCLUDABILITY o The situation in which anyone who does not pay for a good cannot consume it. Four Categories of Goods 0 PRIVATE GOODS N) o A good that is both rival and excludabie. W0 To arrive at a demand curve for a private good, add the o5" quantities at each price. 9,6 . NATURAL MONOPOLIES J o A good that is excludable but not rival. - '-_ \ moi; . COMMON RESOURCES I‘ \ it I o A good that is rivai but not excludable. W . PUBLIC GOODS A good that is both nonrivalrous and nonexcludable. P 0 One cannot be excluded from consuming it, whether one pays for it or not. 0 Free Riding a. Benefiting from a good without paying for it. [>0 To arrive at a demand curve for a public good, add the price each consumer is willing to pay for each quantity of the public good. Tragedy of the Commons . The tendency for a common resource to be overused. ...
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