Public goods & common ressources Flashcards
1
Q
characteristics of common ressources
A
non-excludable
rival
2
Q
characteristics of public goods
A
non-excludable
non-rival
3
Q
what is the problem of the common ressources
A
lead to over-consumption (tragedy of the common)
4
Q
what is the problem with over consumption
A
lead to negative externality
5
Q
what is the problem with the private sector
A
free-rider problem
6
Q
how to counter (solution) the free-rider problem
A
use of the public sector (government)
7
Q
How does the government know in what to put their money in?
A
cost-benefit analysis
8
Q
what does the cost-benefit analysis does?
A
what good to provide and in what quantity to invest in
9
Q
how to counter common ressources?
A
privatize the good (example: sheep)
