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1111Public Goods and Common Resource

Almannagæði og sameiginlegar auðlindir

Figure 1 Four Types of Goods

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Rival?Minnkar notkun eins á vörunni notagildi annarra?

Yes

Yes

• Ice-cream• Clothing•

• Fire protection• Cable TV•

No

Private GoodsEinkavörur

Natural MonopoliesNátturuleg einokun

No

Excludable?Hægt að útiloka aðrafrá notkun? • Fish in the ocean

• The environment• • Tornado siren

• National defense•

Common ResourcesSameiginlegar auðlindir

Public GoodsAlmannagæðiEkki hægt að koma í veg fyrirað sumir þegnar njóti landvarna

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PUBLIC GOODS

• A free-rider is a person who receives the benefit of a good but avoids paying for it.

(free ride = fá frítt far)

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The Free-Rider Problem

• Since people cannot be excluded from enjoying the benefits of a public good (s.s. landvarna), individuals may withhold paying for the good hoping that others will pay for it.

• The free-rider problem prevents private markets from supplying public goods.

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The Free-Rider Problem

• Solving the Free-Rider Problem• The government can decide to provide the public

good if the total benefits exceed the costs.• The government can make everyone better off by

providing the public good and paying for it with tax revenue.