PUBLIC GOODS Flashcards
What is a public good
goods provided by teh governemnt
and not through market mechanisms themselves
where we directly pay for them
give examples of public goods
streetlights
flood defences
Army
what are the 2 fundamental characteristics of public goods
non excludable
non rival
what does non excludable mean
no price can be charged for the good
what does non rival mean
qunatity available doesnt diminish upon consumption
give 1st explanation for why price cant be charged for a public good
benefits of consuiming good cannot just be confined to the individual that has paid for it
even if someone pays people around might benefit in the same way for free
give 2nd explanation for why price cant be charged for a public good
no price can be charged as theres not a cost efficient way of pricing e.g might be too expensive
explain non rivalry using example of chocolatge
if we consume choocolate theres one less that availabel for everyone else
not like pg if someone consumes it the wuantity available stays the same for all esle who wanna consume
explain why streetlights are aprivate good
3 points
non excludable as when someone pays teh benefits arent confided to th eperson that pays as everyone can make use of the streetlight
non ecludable as theres no cost effective way to price the streetlight as would be too expensive for the average consuemr
non rival as wehen consumed the quantity avaiable o streetlgith doesnt dimininsh for everyone else
- one person using it doesnt reduce amount available for others
in a beach theres no cost efficient way to PRICE FOR ALL
water, sand and leisure it provides
theres no cost efficient way to price beahces for all the leisure it provides but in theory what could private firms do
build walls so people have to pay
do to non excludability and non rivalry what do we get
free rider problem
explain the free rider problem
2 marks
consumers got 0 incentive to contribute to provision of public goods
because non rival and non excludable so wait for others to contribute then free ride off their contributions
why do free riders know they can cause the free rider problem
beenfits of PG not confined to person thats paying so can beenfit w/o paying - non excludable
and know if person paying , does consume the same amount is available for them to consume also - non rival
if everyone acts liek a free rider what would happen:
no one would …
no one would pay towards provision of PG at all
if free rider problem means no one would pay towards the provision of PG at all what does this mean for the mkt
if theres no contributions =
no chance of making profit =
no private motive to supply in the free mkt =
0 supply =
missing mkt
explain why a missing market is so deep
complete and worst kind of mkt failure as there’s
high demand for these v socially desirable goods but there’s no supply
if we agree w conclusion of free rider problem and missing mkt whats the only solution
gov to provide through tax revenue
how could we evaluate the idea only solution is for gov to privide through tax revenue
find unique ways of agreeing for private provision
through looking at notion of quasi public goods
what is a quasi public good
public is a good that shows characteristics of a public good (non excludable/rival)
and shows characteristics of a private good ( excludable and rival)
good examples of quasi public goods
roads and beaches
how can roads be excludable
full explanation pls + 3 points
toll roads
not most efficient but possible esp with tech improving it
as dont have to be physical booth but camera that scan plates and can gain rev that way
how can roads be rival
at peak/congestion time road space diminishes upon consumption as when cars take up space theres less space for others
argue beahces are a quasi publci good first through exludability
hotel could own a beach and only allows those that paid for the hotel to use it - price is being charged through cost efficient way (check?)
argue beaches are a quasi publci good
first through rival
finish em sis 2 points - last one is a ko
at peak/congestion times e.g summer holidays one person using it reduces availabliltyof space for to others if its massivley packed
therfore private provision takes place rather than going to the gov
what topic/modern day conept is important to add
role of tech
explian why role of tech is so important in this toppic
2 points
create
therefore
creates csot effctive ways to price [as need less labour and phsical ]
therefore public goods are no longer pure but maybe private goods
