05-class notes

05-class notes - 1 TODAY – class 5 • Continue normative...

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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 person’s 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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05-class notes - 1 TODAY – class 5 • Continue normative...

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