econ092811 - Microeconomics Sept 28th 2011 Problems with...

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Microeconomics Sept. 28 th , 2011 Problems with markets: Public goods, externalities, Prisoner's Dilemmas, and Buffy http://www.youtube.com/watch?v=p3Uos2fzIJ0 Does the opportunity to get rich encourage people to create wealth? What about Buffy? Why can't she make a living? Saving the world doesn't pay unless you can exclude someone. Buffy's problem: she produces a nonexclusive good. No one will pay for what they can get without paying. No one will pay for public goods. They would rather free ride . Safety from demons and vampires is nonexclusive. Everyone is protected when Buffy kills the bad guys. Everyone benefits from clean air, good sidewalks, and the Amherst Common. You get these without paying . Gramercy Park, New York By putting a fence and a locked gate around the park, residents have created a private good. People can profit from Gramercy Park because they have privatized it, made it an exclusive good. Problems with the Market I: Externalities
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econ092811 - Microeconomics Sept 28th 2011 Problems with...

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