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Unformatted text preview: 9/16/2009 1 TODAY class 5 Continue normative analysis Brander (3); Externalities; Informational market failure Brander (10 pp 231 - 234 externalities Brander (10, pp 231 234 externalities) NEXT CLASS Mon Sept 21 - form debate teams Brander (4; pp 68-73 trade-off between efficiency and fairness) Grant T The Rich, the Poor and the Chasm between Comm. 394: Barbara Spencer Grant T The Rich, the Poor and the Chasm between Public Goods 1. non-rival in consumption:- Each persons consumption has no effect on how much others can consume. 2. non-exclusive:- It is impossible (or at least very costly) to exclude anyone from consuming the good. near public goods " Congestion effects make the public good not fully Comm 394: Barbara Spencer non-rival (eg. roads). The good is non-rival, but it is possible to exclude 9/16/2009 2 Is it possible for private firms to supply public goods? If it is not possible to exclude people from getting the benefit from a public good (e g a lighthouse the benefit from a public good (e.g. a lighthouse or national defence), private firms will not be able to charge a price for the good and hence would not be able to cover their costs. Implication Only the government can supply goods where it is not possible to exclude those who do not pay....
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- Fall '08