Chapter 11 - Public goods and common resources

Chapter 11 - Public goods and common resources - Chapter 11...

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Chapter Public Goods and Common Resources 11
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The Different Kinds of Goods Excludability Property of a good A person can be prevented from using it Rivalry in consumption Property of a good One person’s use diminishes other people’s use 2
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Figure Four types of goods 1 3 Rival in consumption? Yes No Excludable ? Yes Private goods - Ice-cream cones - Clothing - Congested toll roads Natural monopolies - Fire protection - Cable TV - Uncongested toll roads No Common resources - Fish in the ocean - The environment - Congested nontoll roads Public goods - Tornado system - National defense - Uncongested nontoll roads Goods can be grouped into four categories according to two characteristics: (1) A good is excludable if people can be prevented from using it. (2) A good is rival in consumption if one person’s use of the good diminishes other people’s use of it. This diagram gives examples of goods in each category.
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The Different Kinds of Goods Types of goods Private goods Public goods Common resources Rival in consumption & Not excludable Natural monopoly 4
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The Different Kinds of Goods Not excludable People cannot be prevented from using them No price attached to it Positive externalities Negative externalities 5
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Chapter 11 - Public goods and common resources - Chapter 11...

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