Public-Goods-and-Common-課件

1、Public Goods and Common ResourcesChapter 11Copyright 2001 by Harcourt, Inc.All rights reserved. Requests for permission to make copies of any part of thework should be mailed to:Permissions Department, Harcourt College Publishers,6277 Sea Harbor Drive, Orlando, Florida 32887-6777.“The best things in

2、 life are free. . .”Free goods provide a special challenge for economic analysisMost goods in our economy are allocated in marketsfor these goods, prices are the signals that guide the decisions of buyers and sellers.“The best things in life are free. . .”When goods are available free of charge, the

3、 market forces that normally allocate resources in our economy are absent.“The best things in life are free. . .”When a good does not have a price attached to it, private markets cannot ensure that the good is produced and consumed in the proper amounts.“The best things in life are free. . .”In such

4、 cases, government policy can potentially remedy the market failure that results, and raise economic well-being.The Different Kinds of GoodsWhen thinking about the various goods in the economy, it is useful to group them according to two characteristics: Is the good excludable? Is the good rival?The

5、 Different Kinds of GoodsExcludabilityPeople can be prevented from enjoying the good.Laws recognize and enforce private property rights.The Different Kinds of Goods RivalnessOne persons use of the good diminishes another persons enjoyment of it. Four Types of GoodsPrivate GoodsPublic GoodsCommon Res

6、ourcesNatural MonopoliesTypes of GoodsPrivate GoodsAre both excludable and rival.Public GoodsAre neither excludable nor rival.Types of GoodsCommon ResourcesAre rival but not excludable.Natural MonopoliesAre excludable but not rival.Types of Goods Rival?Yes NoYes Private Goods Ice-cream cones Clothin

7、g Congested toll roads Natural Monopolies Fire protection Cable TV Uncongested toll roads No Common Resources Fish in the ocean The environment Congested nontoll roads Public Goods National defense Knowledge Uncongested nontoll roads Excludable?The Free-Rider ProblemA free-rider is a person who rece

8、ives the benefit of a good but avoids paying for it.The Free-Rider ProblemSince people cannot be excluded from enjoying the benefits of a public good, individuals may withhold paying for the good hoping that others will pay for it.The free-rider problem prevents private markets from supplying public

9、 goods.Solving the Free-Rider ProblemThe 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.Some Important Public GoodsNational DefenseBasic ResearchProgra

10、ms to Fight PovertyAre Lighthouses Public Goods?Cost-Benefit AnalysisIn order to decide whether to provide a public good or not, the total benefits of all those who use the good must be compared to the costs of providing and maintaining the public good.Cost benefit analysis estimates the total costs

11、 and benefits of a good to society as a whole.Cost-Benefit AnalysisA cost-benefit analysis would be used to estimate the total costs and benefits of the project to society as a whole.It is difficult to do because of the absence of prices needed to estimate social benefits and resource costs.The valu

12、e of life, the consumers time, and aesthetics are difficult to assess.Common ResourcesCommon resources, like public goods, are not excludable. They are available free of charge to anyone who wishes to use them.Common ResourcesCommon resources are rival goods because one persons use of the common res

13、ource reduces other peoples use.Tragedy of the CommonsThe Tragedy of the Commons is a story with a general lesson: When one person uses a common resource, he or she diminishes another persons enjoyment of it.Common resources tend to be used excessively when individuals are not charged for their usag

14、e. This creates a negative externality.Examples of Common ResourcesClean air and waterOil poolsCongested roadsFish, whales, and other wildlifeWhy Isnt the Cow Extinct?PrivateOwnership and the Profit Motive!Importance of Property RightsThe market fails to allocate resources efficiently when property

15、rights are not well-established (i.e. some item of value does not have an owner with the legal authority to control it).Importance of Property RightsWhen the absence of property rights causes a market failure, the government can potentially solve the problem.SummaryGoods differ in whether they are e

16、xcludable and whether they are rival.A good is excludable if it is possible to prevent someone from using it.A good is rival if one persons enjoyment of the good prevents other people from enjoying the same unit of the good.SummaryPublic goods are neither rival nor excludable.Because people are not

17、charged for their use of public goods, they have an incentive to free ride when the good is provided privately.Governments provide public goods, making quantity decisions based upon cost-benefit analysis.SummaryCommon resources are rival but not excludable.Because people are not charged for their us

18、e of common resources, they tend to use them excessively.Governments tend to try to limit the use of common resources.MonopolyChapter 15Copyright 2001 by Harcourt, Inc.All rights reserved. Requests for permission to make copies of any part of thework should be mailed to:Permissions Department, Harco

19、urt College Publishers,6277 Sea Harbor Drive, Orlando, Florida 32887-6777.MonopolyWhile a competitive firm is a price taker, a monopoly firm is a price maker.MonopolyA firm is considered a monopoly if . . .it is the sole seller of its product.its product does not have close substitutes.Why Monopolie

20、s AriseThe fundamental cause of monopoly is barriers to entry.Why Monopolies AriseBarriers to entry have three sources:Ownership of a key resource.The government gives a single firm theexclusive right to produce some good.Costs of production make a single producer more efficient than a large number

21、of producers.Monopoly ResourcesAlthough exclusive ownership of a key resource is a potential source of monopoly, in practice monopolies rarely arise for this reason.Government-Created MonopoliesGovernments may restrict entry by giving a single firm the exclusive right to sell a particular good in ce

22、rtain markets. Government-Created MonopoliesPatent and copyright laws are two important examples of how government creates a monopoly to serve the public interest.Natural MonopoliesAn industry is a natural monopoly when a single firm can supply a good or service to an entire market at a smaller cost

23、 than could two or more firms.Natural MonopoliesA natural monopoly arises when there are economies of scale over the relevant range of output.Economies of Scale as a Cause of Monopoly.Average total costQuantity of OutputCost0Monopoly versus CompetitionMonopolyIs the sole producerHas a downward-slopi

24、ng demand curveIs a price makerReduces price to increase salesCompetition versus MonopolyCompetitive FirmIs one of many producersHas a horizontal demand curveIs a price takerSells as much or as little at same priceQuantity of OutputDemand(a) A Competitive Firms Demand Curve(b) A Monopolists Demand C

25、urve0Price0Quantity of OutputPriceDemandDemand Curves for Competitive and Monopoly Firms.A Monopolys RevenueTotal RevenueP x Q = TRAverage RevenueTR/Q = AR = PMarginal RevenueDTR/DQ = MRA Monopolys Total, Average, and Marginal RevenueQuantity(Q)Price(P)Total Revenue(TR=PxQ)Average Revenue(AR=TR/Q)Marginal Revenue(MR= )0$11.00$0.001$10.00$10.00$10.00$10.002$9.00$18.00$9.00$8.003$8.00$24.00$8.00$6.004$7.00$28.00$7.00$4.005$6.00$30.00$6.00$2.006$5.00$30.00$5.00$0.007$4.00$28.00$4.00-$2.008$3.00$24.00$3.00-$4.00QTRDD/A Monopolys Marginal RevenueA monopolists marginal