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

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

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

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

5. FIGURE 5. 4 Pareto relevance of externality
FIGURE 5.4 Pareto relevance of externality. (S0,L0), steel and laundry production without
coordination; (S1,L1), steel and laundry production with firms merged; Y1, value of
output of merged firm; Y0 value of output without coordination; (ps, pL), prices of steel and laundry.
ENVIRONMENTAL ECONOMICS – 2e
Charles D. Kolstad Copyright © 2011 by Oxford University Press, Inc.

6. produced of nonrival good.
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. QR, quantity produced of rival good; QN, quantity
produced of nonrival good.
ENVIRONMENTAL ECONOMICS – 2e
Charles D. Kolstad Copyright © 2011 by Oxford University Press, Inc.

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

8. charge; q1, number of visitors when price is p1.
FIGURE 5.9 Demand for visits to nonrival, excludable parks. q0, number of visitors with no admission
charge; q1, number of visitors when price is p1.
ENVIRONMENTAL ECONOMICS – 2e
Charles D. Kolstad Copyright © 2011 by Oxford University Press, Inc.