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Intro to Microeconomics_Agnello_Date_042010

Intro to Microeconomics_Agnello_Date_042010 - Otherwise no...

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Chapter 11 - Public Goods and Common Resources - Lack of private property rights over goods and resources can cause markets to fail - For certain goods market’s may not work - No prices to give proper signals for markets to allocate efficiently - Related sometimes to externalities but broader in scope - First - must define exactly what is required for private markets to exist Necessary Property of Goods For Markets to Exist - Excludability - Suppliers need to be able to prevent non payers from benefitting, as much as payers.
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Unformatted text preview: - Otherwise no one will pay and everybody will want to free trade (extreme positive externality)- No demand at p > 0- No supply with production cost equals no market- Rivalry- One person’s use eliminates or at least diminishes the use by other people- If non-rival:- When one person consumes a good there is the same amount for everyone else- Market can exist but wasteful (inefficient) to exclude non-payers...
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