Public goods & common resources

Question 1

What’re the 4 categories of goods? Are they excludable/rival and give examples of each

Answer 1

Private (excludable & rival, e.g. food)

Public (non-excludable & non-rival, e.g. streetlighting)

Common resources (rival, non-excludable, e.g. fish in the ocean)

Club (excludable, non-rival, e.g. cinema tickets (if not full))

Question 2

What is the free-rider problem?

Answer 2

A person who receives the benefit of a good but doesn’t pay for it

Question 3

Govt failure

Answer 3

When MSB doesn’t equal MSC

Question 4

What is the tragedy of the commons?

Answer 4

If use of common resources isn’t regulated, individuals act in self-interest > common resources are over used

Question 5

How can the tragedy of the commons be solved + give an example

Answer 5

Assigning property rights

e.g. in Kenya, Tanzania and Uganda, it is illegal to kill elephants (cos they on brink of extinction)