1. Copyright©2004 South-Western 11 Public Goods and Common Resource Almannagæði og sameiginlegar auðlindir

2. Figure 1 Four Types of Goods Copyright © 2004 South-Western Rival? Minnkar notkun eins á vörunni notagildi annarra? Yes Ice-cream Clothing Fire protection Cable TV No Private Goods Einkavörur Natural Monopolies Nátturuleg einokun No Excludable? Hægt að útiloka aðra frá notkun? Fish in the ocean The environment Tornado siren National defense Common Resources Sameiginlegar auðlindir Public Goods Almannagæði Ekki hægt að koma í veg fyrir að sumir þegnar njóti landvarna

3. Copyright © 2004 South-Western PUBLIC GOODS A free-rider is a person who receives the benefit of a good but avoids paying for it. (free ride = fá frítt far)

4. Copyright © 2004 South-Western The Free-Rider Problem Since people cannot be excluded from enjoying the benefits of a public good (s.s. landvarna), individuals may withhold paying for the good hoping that others will pay for it. The free-rider problem prevents private markets from supplying public goods.

5. Copyright © 2004 South-Western The Free-Rider Problem Solving the Free-Rider Problem The government can decide to provide the public good if the total benefits exceed the costs. The government can make everyone better off by providing the public good and paying for it with tax revenue.