【正文】
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. Public goods ? Subscription Excludable Nonexcludable Rival Private goods Regulated goods(?) Nonrival Club goods Public goods Public goods ? Subscription – Excludability is the property problem – Rivality is the physical problem. – (1989), Public domain – Price determined by the property. 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 12121 if0 ifg g cGg g c???? ????Public goods ? Discrete case: benchmark ? If providing the public goods will Pareto dominate non. So ? ri: the reservation price of i. 1 1 1 1 12 2 2 2 2( 1 , ) (0 , )( 1 , ) (0 , )u w g u wu w g u w????( 1 , ) ( 0 , )i i i i iu w r u w??Public goods ? Then will get: ? The sum of reservation price exceeds the cost of public goods, it’s efficient to provide the public goods. 1 2 1 2r r g g c? ? ? ?Public goods ? But, can private provide it?