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ENVIRONMENTAL ECONOMICS – 2e Charles D. Kolstad Copyright © 2011 by Oxford University Press, Inc. C H A P T E R 5 MARKET FAILURE: PUBLIC GOODS, PUBLIC.

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Presentation on theme: "ENVIRONMENTAL ECONOMICS – 2e Charles D. Kolstad Copyright © 2011 by Oxford University Press, Inc. C H A P T E R 5 MARKET FAILURE: PUBLIC GOODS, PUBLIC."— Presentation transcript:

1 ENVIRONMENTAL ECONOMICS – 2e Charles D. Kolstad Copyright © 2011 by Oxford University Press, Inc. C H A P T E R 5 MARKET FAILURE: PUBLIC GOODS, PUBLIC BADS, AND EXTERNALITIES

2 ENVIRONMENTAL ECONOMICS – 2e Charles D. Kolstad Copyright © 2011 by Oxford University Press, Inc. FIGURE 5.1 Illustration of an open access resource.

3 ENVIRONMENTAL ECONOMICS – 2e Charles D. Kolstad Copyright © 2011 by Oxford University Press, Inc. FIGURE 5.2 Production possibilites with an externality, steel and laundry.

4 ENVIRONMENTAL ECONOMICS – 2e Charles D. Kolstad Copyright © 2011 by Oxford University Press, Inc. FIGURE 5.3 Indifference curves with consumption externality.

5 ENVIRONMENTAL ECONOMICS – 2e Charles D. Kolstad Copyright © 2011 by Oxford University Press, Inc. FIGURE 5.4 Pareto relevance of externality. (S 0,L 0 ), steel and laundry production without coordination; (S 1,L 1 ), steel and laundry production with firms merged; Y 1, value of output of merged firm; Y 0 value of output without coordination; (p s, p L ), prices of steel and laundry.

6 ENVIRONMENTAL ECONOMICS – 2e Charles D. Kolstad Copyright © 2011 by Oxford University Press, Inc. FIGURE 5.7 Supply and demand, rival vs. nonrival goods, (a) individual demands; (b) aggregate demand, rival good; (c) aggregate demand, nonrival good; (d) efficient provision. Q R, quantity produced of rival good; Q N, quantity produced of nonrival good.

7 ENVIRONMENTAL ECONOMICS – 2e Charles D. Kolstad Copyright © 2011 by Oxford University Press, Inc.

8 ENVIRONMENTAL ECONOMICS – 2e Charles D. Kolstad Copyright © 2011 by Oxford University Press, Inc. FIGURE 5.9 Demand for visits to nonrival, excludable parks. q 0, number of visitors with no admission charge; q 1, number of visitors when price is p 1.


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