Chapter+11+Public+Goods+and+Common+Resources+JBS

=**Chapter 11 Public Goods and Common Resources JBS **=

**Key Terms** 
 * Excludability**: the property of a good whereby a person can be prevented from using it


 * Rivalry in Consumption**: the property of a good whereby one person's use diminishes other people's use


 * Private Goods**: goods that are both excludable and rival in consumption


 * Public Goods**: goods that are neither excludable nor rival in consumption


 * Common Resources**: goods that are rival in consumption but not excludable


 * Free Rider**: a person who receives the benefit of a good but avoids paying for it


 * Cost-benefit Analysis**: a study that compares the costs and benefits to society of providing a public good

**Four Types of Goods **

 *  || Excludable || Non-Excludable ||
 * Rivalry || Private Good
 * Clothing
 * Congested toll road || Common Good
 * Cable TV
 * Un-congested toll road ||
 * Non-Rivalry || Natural Monopoly
 * <span style="font-family: Tahoma,Geneva,sans-serif;">Fish in the Ocean
 * <span style="font-family: Tahoma,Geneva,sans-serif;">Congested non-toll road || <span style="font-family: Tahoma,Geneva,sans-serif;">Public Good
 * <span style="font-family: Tahoma,Geneva,sans-serif;">National Defense
 * <span style="font-family: Tahoma,Geneva,sans-serif;">Un-congested non-toll road ||

<span style="color: #008080; font-family: Tahoma,Geneva,sans-serif;">**Free-Rider**

 * <span style="font-family: Tahoma,Geneva,sans-serif;">A person who receives the benefit of a good but avoids paying for it
 * <span style="font-family: Tahoma,Geneva,sans-serif;">Example: people who do not pay but enjoy the fire work at the outside of park → Reduce firework → Government interfere
 * <span style="font-family: Tahoma,Geneva,sans-serif;">The //free-rider problem prevents private markets from supplying public goods//
 * <span style="font-family: Tahoma,Geneva,sans-serif;">Solving the Free-Rider problem: Government can decide to provide the public good if the total benefits exceed the cost; the government can make everyone better off by providing the public good and paying for it with tax revenue.



<span style="color: #008080; font-family: Tahoma,Geneva,sans-serif;">**Property Right**
<span style="font-family: Tahoma,Geneva,sans-serif;">**Cost-Benefit Analysis** The goal of which is to estimate the total costs and benefits of the project to society as a whole. It is a tough jab because simply asking people how much they would value the "highways" are not reliable

<span style="color: #008080; font-family: Tahoma,Geneva,sans-serif;">Tragedy of the Commons

 * <span style="font-family: Tahoma,Geneva,sans-serif;">Illustrates why common resources get used more than is desirable from the standpoint of society as a whole
 * <span style="font-family: Tahoma,Geneva,sans-serif;">Common resources tend to be used excessively when individuals are not charged for their usage
 * <span style="font-family: Tahoma,Geneva,sans-serif;">Similar to a Negative Externality

<span style="color: #008080; font-family: Tahoma,Geneva,sans-serif;">Conclusion
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