Ch. 5 Outline - b Common examples 1 2 c Free-riding 3...

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Chapter 5 Outline Difficult Cases for the Market, and the Role of Government Econ 1B, Fall 2009 A. Implications of markets – Economic systems 1. What, how, and for whom a. An economic system b. What c. How d. Who gets it 2. Capitalism, communism, and something in between a. Capitalism b. Communism c. Socialism d. Real systems e. Degree of government involvement 1) 2) 3) 4) 5) 6) 7) 8) 9) 10) B. Functions of government in capitalism – English philosopher - http://en.wikipedia.org/ wiki/John_Locke 1. Private property a. Tragedy of the commons b. If every owns, ? 1) Cost shared 1
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2) Benefits shared 3) Party negotiation c. If no third party effects (externalities) 2. Public goods and free-riding a. Characteristics 1) 2)
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Unformatted text preview: b. Common examples 1) 2) c. Free-riding 3. Market failure and externalities a. monopoly 1) 2) 3) 4) 5) 6) b. information asymmetry 1) 2) 3) c) third-party effects 1) 2) 3) 4) C. Public choice 1. Political actors a. b. c. d. 2 2. Voters experience rational ignorance a. Private choices b. Public choices 1) Rational irrationality 2) All or nothing 3) Irregular choice 4) No view of the alternative 3. Politicians a. Primary goal b. An example - vote-trading 4. Bureaucracies 5. Special interests a. Benefits and costs b. Group formation c. Political capture 1) Market barriers 2) Campaign finance reform D. So governments can fail just like markets 3...
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Ch. 5 Outline - b Common examples 1 2 c Free-riding 3...

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