Lecture 15: public goods and externality
Lecture 15: public goods and externality
Content Public goods Subscription Efficient provision of public goods Public choice Externality What's externality? How to solute it? What's the efficient condition with externality
Content • Public goods – Subscription – Efficient provision of public goods – Public choice • Externality – What’s externality? – How to solute it? – What’s the efficient condition with externality
Public goods ° Subscription Excludable Non-excludable Rival Private goods Regulated goods(? Non-rival Club goods Public goods
Public goods • Subscription Excludable Non-excludable Rival Private goods Regulated goods(?) Non-rival Club goods Public goods
Public goods Subscription EXcludability is the property problem Rivality is the physical problem YBarzel(1989), Public domain Price determined by the property
Public goods • Subscription – Excludability is the property problem – Rivality is the physical problem. – Y.Barzel(1989), Public domain – Price determined by the property
Public goods Efficient provision of public goods Discrete case x;: private goods G: public goods 8i: is contribution to public goods u, (G,xi), utility function fg1+g2≥C G lo if 8+g2<c
Public goods • Efficient provision of public goods • Discrete case: – xi : private goods – G: public goods – gi : i’s contribution to public goods – ui (G,xi ), utility function 1 2 1 2 1 if 0 if g g c G g g c + = +