ECO101H1 Lecture Notes - Lecture 12: Sundae, Mira-Bhayandar Municipal Corporation, Natural Monopoly
98
ECO101H1 Full Course Notes
Verified Note
98 documents
Document Summary
The role of government: overview, public and private goods, provision of public goods, excise taxes and ae. Improve efficiency if market failure : monopoly, externalities, public goods, alter distribution of income. Natural monopoly [declining atc as output expands] (natural monopoly is national monopoly) Government policy: regulate price set by monopoly (set p=atc, so the firm earns zero economic profit, do not promote competition [encourage other firms to enter] If there is a negative production externality, such as pollution, market fails by producing too much output and setting too low a price. Public and private goods: two characteristics of goods. Excludability: a person can be excluded from using a good. Rivalness: one person"s use of good diminishes other people"s use: pure private goods, excludable, rival. Key result: private market cannot produce public goods. Total value > cost: private market efficient to build (should build, entrepreneur requires ( million/2,000) from each owner.
