BSB113 Chapter Notes - Chapter 11: Coase Theorem, Contestable Market, Freeriding
Document Summary
The legal system and the rule of law. Contestable market: a market in which the potential for competition exists due to minimal entry and exit costs. Natural monopolies: a situation in which economies of sale are so large that one firm can supply the entire market at a lower average cost than can two or more firms. Externalities: a benefit or cost that affects someone who is not directly involved in the production or consumption of a good or service. Common resource: an extreme case of externalities where no one can be denied access to the resource but one person"s use of the resource reduces the possible use of others. Public goods: a good or service which an additional consumer does not use up" or prevent another"s use of it, and no one can be excluded from consuming the good or service. Merit goods: a good which is beneficial to society in irrespective of the preferences of consumers.
