Microeconomics Chapter 11 (Public Goods and Common Resources)

the property of a good whereby a person can be prevented from using it

the property of a good whereby one person's use diminishes other people's use

In some case, the definition of rivalry in consumption depends on the condition or utilization of the good in question

goods that are both excludable and rival in consumption

goods that are neither excludable nor rival in consumption

often not made because no one wants to pay so gov. should

goods that are rival in consumption but not excludable

tragedy of the commons

goods that are excludable but not rival in consumption

a person who receives the benefit of a good but avoids paying for it

a study that compares the costs and benefits to society of providing a public good

a parable that illustrates why common resources are used more than is desirable from the standpoint of society as a whole

Regulations or corrective taxes to reduce pollution

- Tax on gasoline to reduce automobile use
- Charge toll to avoid congestion on busy roads

-Fishing licenses (only licensed fishermen have the right to fish in specific waters)
- Limits on fishing and hunting seasons
- Limits on quantity of animals killed
- Limits on size of animal killed (e.g. small fish are not to be caught)

- Illegal to kill elephants and sell ivory
- Turn elephants as private good (define/assign property rights) so owners have the incentive to preserve the species.

Public goods tend to be under-produced, while common resources tend to be over- consumed

-provision of public goods & common resources (using taxpayers' money)
• corrective taxes or selling permits on the use of common resources
• regulations (command-and-control approach)
• defining/assigning property rights (turn them to be private goods or club goods)