Lecture 2

Question 1

Prerequisites for economically efficient alloqation of goods –> maximize net benefit

Answer 1

Property rights have to be well defined

Question 2

Well defined definition

Answer 2

• comprehensive
• secure
• exclusive
• transferable

Question 3

types of goods and their properties

Answer 3

non excludable/non rival:
-public goods
non rival/ excludable:
-club goods
rival/non excludable:
open access ressources
rival/excludable:
private goods

Question 4

Reasons for failure of markets to generate the efficient outcome

Answer 4

positive or negative externalities;

externalities cause welfare loss either way