Chapter 18 Externalities and Public Goods
Chapter 18 Externalities and Public Goods
Topics to be Discussed ■ Externalities a Ways of Correcting Market Failure a EXternalities and Property Rights a Common Property Resources Chapter 18 Slide 2
Chapter 18 Slide 2 Topics to be Discussed ◼ Externalities ◼ Ways of Correcting Market Failure ◼ Externalities and Property Rights ◼ Common Property Resources
Topics to be Discussed ■ Public goods a Private Preferences for public goods Chapter 18 Slide 3
Chapter 18 Slide 3 Topics to be Discussed ◼ Public Goods ◼ Private Preferences for Public Goods
Externalities ■ Negative Action by one party imposes a cost on another party ■ Positive o Action by one party benefits another party Chapter 18 Slide 4
Chapter 18 Slide 4 Externalities ◼ Negative ⚫ Action by one party imposes a cost on another party ◼ Positive ⚫ Action by one party benefits another party
External Cost ■ Scenario Steel plant dumping waste in a river o The entire steel market effluent can be reduced by lowering output(fixed proportions production function) Chapter 18 Slide 5
Chapter 18 Slide 5 External Cost ◼ Scenario ⚫ Steel plant dumping waste in a river ⚫ The entire steel market effluent can be reduced by lowering output (fixed proportions production function)