Econ 131 lecture 6

Econ 131 lecture 6 - Announcements TA Session Wednesday...

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Announcements TA Session Wednesday 6:30pm WLH 2005 Quiz Thursday (25 minutes, lecture afterward) Speaker on clean tech (and electric cars): Byron Washom Wednesday 10/12 8-10pm Cognitive Science Bldg 001 Outline Finish chapter 5 (last part of material for quiz) Chapter 8 (not on quiz) Thursday: Chapters 8 and 9
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Private Provision of Public Goods Private Provision of Public Goods
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The Tragedy of the Commons Perhaps the oldest and most famous example of a public goods problem Phrase comes from an English pasture (a “commons”) that becomes overgrazed It is nonexcludable (anyone in town can use it) but it is rival (only so much grass can be eaten each day without killing it) The Tragedy AfFicts All Open-Access Resources ±isheries Rainforest that cannot be guarded Others?
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All Are Externalities All these problems, including free-riding in public goods and the tragedy of the commons are just externalities expressed a different way The standard analysis of externalities can be used to address them all Provision of a public good creates a positive externality for others Using a commons creates a negative externality for others Collective Action Problems We can use game theory to describe the problem that multiple actors (usually two for convenience) have in providing public goods Called the collective action problem Also serves to model the difFculty avoiding damage to the commons, e.g. providing clean air, good grazing land, etc.
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Details Total cost of providing public good: 4 BeneFt to each player if provided: 3 How is each of the individual values in the table calculated? How would penalties for shirking
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This note was uploaded on 01/30/2012 for the course ECON 131 taught by Professor Groves during the Spring '09 term at UCSD.

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Econ 131 lecture 6 - Announcements TA Session Wednesday...

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