PUP-3002 Lecture Notes - Lecture 1: Natural Monopoly, Oligopoly, Planned Economy
Document Summary
Market failure: monopolies, externaliies, informaion asymmetries, collecive acion problems. Scarcity implies the need to raion goods and services: there are many ways to do this, goods are eiciently providing to the extent that they provide the maximum net beneits to society. Put diferently there is no way, given the current technology, that the good can be produced at less cost and sill provide the same amount of beneits to society. Market economies allocate goods through the price mechanism. Asserion 1: open and compeiive markets eiciently provide goods and services: compeiion lowers costs of producion and therefore lowers prices for consumers, caveat: certain condiions must be met. Generally not as eicient as market economies because they don"t have access to informaion. That goods are allocated according to need (or some other criteria) Does everyone who needs a salad have a salad? no. Asserion 2: markets are oten inequitable: caveat: here we"re talking about equity in outcomes not in terms of process.
