Public Goods and Common Resources Economics for Business II Day 10 Spring 2013

April Public (Government) Action? Question: When should the government act on behalf of society, even if it means interfering with private enterprise?

April Non-excludability the goods cannot be confined to those who have paid for it

April Non-rivalry in consumption the consumption of one individual does not reduce the availability of goods to others

April Is the SUN a rival good?

April Spot the free rider

April Public Goods - Benefits

April World's Largest Solar Street Lighting Project by PTLSOLAR.

April Lighting

April Flood barriers on the Thames River.

April Flood barriers on the Thames River.

April The flood control system built on the Thames to control higher than normal

April

April Eastern Scheldt Storm Surge Barrier in the Netherlands

April Property Rights The importance of Property Rights –the market fails to allocate resources efficiently because of the not well-established property rights –when markets fail due to the absence of property rights, the government can step in and solve the problem by using regulation or taxing.

April Summary Public goods refer to the goods that are not excludable or rival in consumption Common resources are not excludable but rival in consumption A common resources create new problem: how much is it going to be used? (Tragedy of the Commons) When markets fail due to the absence of property rights, the government can step in and solve the problem by using regulation or taxing