文档介绍：Chapter 4 - Public Goods
Public Economics
1
Public Goods Defined
Pure public goods share two characteristics
Nonrival – Cost of another person consuming the good is zero
Nonexcludable – Very expensive to prevent others from consuming the good
2
Examples of public and private goods
Public Goods
National defense
House cleaning in an apartment with many roommates
Fireworks display
Music file sharing
Uncongested freeway
Private goods
Pizza
Health care
Congested freeway
Public housing
3
Valuation of public goods
Everyone consumes same quantity of public good
Marginal benefit of public good varies by person
In the housecleaning example, different roommates value the clean apartment differently.
4
Impure public goods
Most goods that are thought of as public goods may not strictly satisfy the nonrival or nonexcludable assumption.
A scenic view is a public good without congestion, but the quality diminishes as more the number of sightseers increases.
Thus, a scenic view es rival.
5
Private goods can be provided by the public sector
These are called “publicly provided private goods.”
Key criteria: is the good rival and excludable?
Public housing is rival (one family consumes one apartment) and excludable (easy to prevent consumption).
6
Efficient provision of private goods
Derivation of aggregate demand
Each person’s demand curve represents the willingness-to-pay for an additional unit of a good.
Private good: holding P constant, add together individual quantities to get Q.
Horizontal summation
7
Figure
8
Equilibrium in private goods market
Equilibrium where supply curve intersects aggregate demand curve.
Everyone pays the same price, P.
Individuals consume different quantities, Q.
Pareto efficient.
9
Efficient provision of public goods
Consider a fireworks display as a public good – it is nonrival and nonexcludable.
Bigger displays give higher benefit.
Public good: holding Q constant, add together individual willingness-to-pay to get P.
Vertic