1CHAPTER 11PUBLIC GOODS AND COMMON RESOURCESIn this chapter, look for the answers to these questions:What are public goods? What are common resources? Give examples of each. Why do markets generally fail to provide the efficient amounts of these goods?How might the government improve market outcomes in the case of public goods or common resources?
2CHAPTER 11PUBLIC GOODS AND COMMON RESOURCESIntroductionWe consume many goods without paying: parks, national defense, clean air & water. When goods are free, the market forces that normally allocate resources are absent. The private market may fail to provide the socially efficient quantity of such goods. One of the Ten Principles from Chapter 1: Governments can sometimes improve market outcomes.
3CHAPTER 11PUBLIC GOODS AND COMMON RESOURCES
4CHAPTER 11PUBLIC GOODS AND COMMON RESOURCESThe Different Kinds of GoodsPrivate goods: excludable, rival in consumptionexample: foodPublic goods: not excludable, not rivalexample: national defenseCommon resources: rival but not excludableexample: fish in the oceanNatural monopolies: excludable but not rivalexample: cable TV
AACCTTIIVVE LE LEEAARRNNIINNG G 11: : Categorizing roadsCategorizing roadsA road is whichof the four kinds of goods?Hint: The answer depends on whether the road is congested or not, and whether it’s a toll road or not. Consider the different cases.