ECON 001A Lecture 2: Chapter_19
28 May 2020
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Document Summary
Chapter 19: public goods and the tragedy of the commons. Non-excludable: it is difficult to prevent people from using the good at a low cost. Non-rival: if one person"s use of the good does not reduce the ability of another person to use the same good. Private goods (pair of jeans, contact lenses, hamburger) Common goods - no one takes ownership for it (the environment, fish in the ocean, public roads, public parks) Marketable public goods (cable tv, wi-fi, digital music) Public goods (national defense, the law, street lighting) Free-rider problem: goods that are nonexcludable suffer from the free-rider problem: many individuals are unwilling to pay for their own consumption and instead will take a "free ride" on anyone who does pay. Tragedy of the commons: the self interest of individuals results in the destruction of a common or shared resource.
