2010 slides public goods

2010 slides public goods - 1 Public goods& A pure public...

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Unformatted text preview: 1 Public goods & A pure public good is a good in which you cannot exclude other consumers and also your consumption does not diminish the consumption of others. & E.g. national defence, broadcast TV, a theorem in mathematics, knowledge. & A local public good is one where your consumption does not diminish the consumption of others but oth- ers can be excluded. E.g. cable TV & The issue is how much public goods will be provided privately and what is the socially e¢ cient level of production. 1.1 Public good underprovision and the free riding problem & Consider a public television station. Let the quality of the programs which the station provides be q . Let the cost of providing quality q be q . & There are n identical viewers. A viewer has bene&t b ( q ) , b > ; b 00 < if she views a program of quality q . & Each viewer can make a voluntary contribution to the station. No viewer can be excluded from viewing the programs independent of their contribution. & We want to &nd how much will each individual con- tribute to the station. & Let viewer i contribute c i to the station. & Let the sum of the contributions of the other n ¡ 1 contributors be C ¡ i ....
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This note was uploaded on 04/10/2010 for the course ECO ECO200 taught by Professor Carlosserrano during the Spring '10 term at University of Toronto.

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2010 slides public goods - 1 Public goods& A pure public...

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