Mostly summarized from Gregory Mankiw’s Principles of
Economics, 5th Ed.
PART 4 The Economics of the Public Sector
Chapter 11 of 36 Public Goods and Common Resources
Section 4 of 14
…
As shown in Figure 1, goods can be grouped
into four categories using two characteristics.
· a good is excludable if people can be prevented from using it
· a good is rival in consumption if one person's use of the good lessens other people's use of it.
…
But the boundary between the characteristics and categories
is sometimes unclear.
Fish in an ocean may not be excludable because monitoring
and controlling fishing is difficult.
A large coast guard enforcing limits can make fish partly
excludable.
Although fish are generally rival in consumption this would
be less true if the population of fishermen is small relative to the population
of fish.
…
Consider the C and D categories of non-excludable goods
· common resources
· public goods
People cannot be prevented from using these goods.
They are available to everyone free.
For both of these types of goods externalities arise because
something of value has no price.
…
From ChatGPT:
Common resource with a negative externality example - overfished
ocean fisheries.
Why it's a common resource:
Fish in the ocean are non-excludable - anyone can fish, but
rivalrous - catching fish reduces the amount available for others.
Negative externality because overfishing depletes fish
stocks, disrupting ecosystems, reducing biodiversity, and harming the long-term
availability of fish for everyone.
The environmental costs are borne by society rather than the
individuals causing the harm.
…
Common Resource with a Positive Externality example - community
forest with sustainable management.
Why it's a common resource:
A community forest is non-excludable - is accessible to all members
of the community, and rivalrous - overuse diminishes resources like firewood or
timber.
Positive externality happens when managed sustainably, the
forest provides benefits like carbon sequestration, improved air quality, water
cycle regulation, and wildlife habitat.
These benefits extend to people outside the community as
well.
…
Public Good with a Negative Externality example - public
roads leading to congestion and pollution.
Why it's a public good:
Roads are typically non-excludable - anyone can use them and
non-rivalrous up to a point - one more user does not immediately prevent others
from using them.
Negative externality:
When roads become congested, the additional traffic imposes
delays and increases air pollution, negatively affecting others.
The costs of congestion and pollution are not borne directly
by individual drivers.
…
Public Good with a Positive Externality example - national defense.
Why it's a public good:
National defense is non-excludable - everyone within a
nation benefits and non-rivalrous - one person's security does not reduce
others' security.
Positive externality:
National defense provides broader benefits like geopolitical
stability, which fosters economic growth, international trade, and overall
societal well-being.
(end ChatGPT)
…
Private decisions about consumption and production of common
resources and public goods can lead to an inefficient allocation of resources
resulting in negative and positive externalities.
Government intervention can make allocation of resources
more efficient resulting in reduced negative externalities and increased positive
externalities.
…
government intervention
seifu kainyū
政府介入
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