3.1 Benefits and Costs Within Primary Markets.pdf - Bene\ufb01t-Cost Analysis BENEFITS AND COSTS WITHIN MARKETS Bene\ufb01t-Cost Analysis Bene\ufb01ts and Costs

3.1 Benefits and Costs Within Primary Markets.pdf -...

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Benefit-Cost Analysis BENEFITS AND COSTS WITHIN MARKETS Benefit-Cost Analysis
Benefits and Costs in Primary and Secondary Markets Benefits and Costs Within Markets Benefits and Costs Within Markets
Benefits and Costs in Primary Markets Par7al equilibrium benefit-cost analysis of market interven7ons. Monopoly Natural Monopoly Nega%ve Externality Posi7ve Externality Informa%on Asymmetry Public Goods Addic7ve Goods Benefits and Costs Within Markets
Market IntervenFon: Monopoly Net benefit of breaking monopoly is avoided deadweight loss Parse it in benefit-cost terms Benefits and Costs Within Markets Group Benefits (B) Costs (C) Net Benefits (= B-C) Consumers C+D+E -- C+D+E Producers -- C+D G TOTAL C+D+E C+D = C+D+E+G – (C+D) = E+G A B C D E G F H
Market IntervenFon: Natural Monopoly Op7ons No interven7on Qm , Pm è DWL=abc Average Cost Qf, Pf è benefit=abed Marginal Cost Qc, Pc è benefit=abc No Cost Q 0 , P=0 è benefit=aQmQ0 Benefits and Costs Within Markets
In 2010, Zoom TV began mass-marke7ng "the Fushigi Magic Gravity Ball", an acrylic contact juggling ball with a steel core. The ball possesses special proper7es that make it "appear to float" and improve balance and control. The price was $26.99, including processing. The television commercial consisted of a montage of contact juggling performance and an announcer sugges7ng that the ball can be quickly mastered "in just minutes.” This raised concerned about the public depic7on of contact juggling being accomplished not by skill but by means of a special prop. Professional contact jugglers

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