0 50 tb 35 m 10 15 net benefit 20 billion 1 2 3 4 5 0

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Unformatted text preview: benefit $2.0 billion 1 2 3 4 5 0 Quantity (number of acid-rain checks) acid- Efficient use of resources MB 0 1 2 3 4 5 Quantity (number of acid-rain checks) acid- Bureaucratic Overprovision Bureaucratic Overprovision TC Total benefit and total cost (billions of dollars) 7.5 5.0 Goal of of bureaucracy TB 3.5 1.5 0 Efficient provision 1 2 3 4 5 Quantity (number of acid-rain checks) acid- Two Two Types of Political Equilibrium Equilibrium Public (Social) Interest Theory (Social) Interest Theory – governments make choices that achieve efficiency efficiency. • fully informed voters Public Choice Theory – governments make choices that result in make choices that result in inefficiency. • rationally ignorant voters (the cost of acquiring the ignorant voters (the cost of acquiring the inf. is greater than the benefit of having the info.) Common Resources Common Resources • Tragedy of the Commons of the Commons – Lack of incentives to prevent the overuse of a commonly used resource commonly used resource Common Resources Common Resources •Sustainable Production –The rate of rate of production that can be maintained indefinitely # Boats (000s) Total Catch (000s) Ave. Industry Catch (per Marginal boat...
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