SECTION IX OUTLINE

SECTION IX OUTLINE - I. SECTION IX MARKET FAILURE a. Three...

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I. SECTION IX – MARKET FAILURE a. Three causes of market failure: public goods, common property resources, and externalities b. Public Goods i. With public goods, consumption by one person does not diminish the amount that others can consume 1. National defense is an example. Whatever the level of military preparedness, all citizens defended receive the same amount ii. Public goods will not be provided by the private market unless the cost of provision can be covered iii. Nonetheless, the private market does not supply several public goods 1. Television and radio waves are privately provided public goods which is provided by selling commercial time to advertisers c. Common Property Resources i. Normally, ownership of a good comes with a property right to exclude others from using the good ii. Certain resources, known as common property resources lack well-defined rights to exclusion 1. For example, no one has the property rights to blue whales, oil, pasture lands iii. Public areas of all types – beaches, the student union, the dorm lobbies – are other abused
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This note was uploaded on 04/10/2008 for the course ECON 1 taught by Professor Bergstrom during the Fall '07 term at UCSB.

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SECTION IX OUTLINE - I. SECTION IX MARKET FAILURE a. Three...

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