kinds of goods Flashcards
1
Q
coase theorem
A
- private parties can bargain over the allocations of resources
- only works when both parties can reach an agreement, however doesnt work
2
Q
- transaction costs
A
-> the costs that parties incur in the process of agreeing to and following thru on a bargain
- > e.g. may need to hire a translator
- > eg. lawyers
-> reaching an efficient bargain is difficult when interested parties is large
3
Q
- excludable
A
-> people prevented from using the good
4
Q
rival
A
-> one person’s use of the good reduces another person ability to use
5
Q
private good
A
- > excludable and rival
- > eg. ice cream cone
6
Q
public goods
A
- > neither excludable nor rival
- > light house
7
Q
common resource
A
- > fish
- > 1 person uses it, other can not but open to every1
- > rival but not excludable
8
Q
club goods
A
-> excludable but not rival
9
Q
- free rider problem
A
- > person who receives benefit of a good but does not pay for it
- > market fails to provide efficient outcome
- > socially desirable but not profitable
- > public goods,
- > eg. national defence, fireworks
10
Q
- cost benefit analysis
A
-> study that compares the costs and benefits to society of providing a public good
11
Q
- tragedy of commons
A
-> using resources more than socially desired
