PROVIDE PUBLIC GOODS PUBLIC GOOD: PRODUCT OR SERVICE WHICH, ONCE PROVIDED, IS AVAILABLE FOR ALL TO USE; OR, IT IS COSTLY TO EXCLUDE USERS IN CONTRAST:

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Presentation transcript:

PROVIDE PUBLIC GOODS PUBLIC GOOD: PRODUCT OR SERVICE WHICH, ONCE PROVIDED, IS AVAILABLE FOR ALL TO USE; OR, IT IS COSTLY TO EXCLUDE USERS IN CONTRAST: A PRIVATE GOOD IS ONE WHICH, ONCE USED, IS NOT AVAILABLE TO ANYONE ELSE (HAMBURGER)

“WALDEN ACRES” – A LUXURY RESIDENTIAL DEVELOPMENT WITH A LAKE PROBLEM: MOSQUITOES FROM THE LAKE CARRY POTENTIAL DISEASES ONCE THEY ARE ERADICATED, EVERYONE IN WALDEN ACRES BENEFITS THEREFORE, EVERYONE IS MOTIVATED TO BE A “FREE RIDER” – WAIT FOR SOMEONE ELSE TO PAY FOR THE MOSQUITO CONTROL

“LET TRUMP PAY” DONALD TRUMP OWNS A LOT IN “WALDEN ACRES” EVERYONE ELSE THINKS – TRUMP WILL BE ANNOYED BY THE MOSQUITOES, AND HE’LL PAY FOR THE ERADICATION BUT TRUMP SAYS, “NO WAY” – I’LL JUST GO TO MY HOME IN FLORIDA!!!

THE OBVIOUS SOLUTION ALL OWNERS PAY A SHARE OF THE COST OF MOSQUITO CONTROL 100 OWNERS COST IS $10,000 EACH OWNER PAYS $100 OWNERS ELECT A “BOARD” TO COLLECT THE FEES AND HIRE THE PEST CONTROL COMPANY

THE SOLUTION IS A GOVERNMENT TO PROVIDE THE PUBLIC GOOD PUBLIC GOOD = MOSQUITO CONTROL TAX = MOSQUITO CONTROL FEE BOARD IS THE ELECTED GOVERNMENT

EXAMPLES OF PUBLIC GOODS NATIONAL DEFENSE – ONCE THE MILITARY IS PROVIDED, ALL IN U.S. ARE PROTECTED STANDARD ROADS – ONCE BUILT, EXPENSIVE TO EXCLUDE DRIVERS (GATES, ROADBLOCKS) PUBLIC SAFETY – ALL BENEFIT FROM CRIMINALS BEING CAUGHT AND FIRES BEING PREVENTED (ESP. IN CITIES)

ISSUES WITH PUBLIC GOODS 1.“ONE SIZE FITS ALL” – EVERYONE MUST CONSUME THE SAME AMOUNT 2.FOR SOME, CAN SEPARATE THE FUNDING FROM THE PROVISION (PUBLIC MONEY PAYS FOR PRIVATE GARBAGE COLLECTION) 3.TECHNOLOGY CAN CHANGE WHAT QUALIFIES AS A PUBLIC GOOD – MODERN TOLL ROADS AS PRIVATE GOODS