【正文】 Chapter 1 ? A Legal Solution Suing for Damages ? Factory has the right to emit effluent ? Fishermen have three options ?Put in treatment plant ? Profit = $200 ?Filter and pay damages ? Profit = $300 ($500 $200) ?No plant, no filter ? Profit = $100 Externalities and Property Rights 43 Chapter 1 ? Conclusion ? A suit for damages results in an efficient oute. ? Question ? How would imperfect information impact the oute? Externalities and Property Rights 44 Chapter 1 The Coase Theorem at Work ? Negotiating an Efficient Solution ? 1987 New York garbage spill (200 tons) littered the New Jersey beaches ?The potential cost of litigation resulted in a solution that was mutually beneficial to both parties. 45 Chapter 1 Common Property Resources ? Common Property Resource ? Everyone has free access. ? Likely to be overutilized ? Examples ?Air and water ?Fish and animal populations ?Minerals 46 Chapter 1 Common Property Resources Fish per Month Benefits, Costs ($ per fish) Demand However, private costs underestimate true cost. The efficient level of fish/month is F* where MSC = MB (D) Marginal Social Cost F* Private Cost FC Without control the number of fish/month is FC where PC = MB. 47 Chapter 1 Common Property Resources ? Solution ? Private ownership ? Question ? When would private ownership be impractical? 48 Chapter 1 Crawfish Fishing in Lousiana ? Finding the Efficient Crawfish Catch ? F = crawfish catch in millions of pounds/yr ? C = cost in dollars/pound 49 Chapter 1 Crawfish Fishing in Lousiana ? Demand ? C = = ? MSC ? C = + ? PC ? C = + 50 Chapter 1 Crawfish Fishing in Lousiana ? Efficient Catch ? million pounds ? D = MSC 51 Chapter 1 Crawfish Catch (millions of pounds) C Cost (dollars/pound) Demand Marginal Social Cost Private Cost Crawfish as a Common Property Resource 52 Chapter 1 Public Goods ? Question ? When should government replace firms as the producer of goods and services? 53 Chapter 1 Public Goods ? Public Good Characteristics ? Nonrival ?For any given level of production the marginal cost of providing it to an additional consumer is zero. ? Nonexclusive ?People cannot be excluded from consuming the good. 54 Chapter 1 Public Goods ? Not all government produced goods are public goods ? Some are rival and nonexclusive ?Education ?Parks 55 Chapter 1 Example A good that is nonrival and noexcludabe is a pure public good. Some goods are nonrival, but excludable. Other goods are nonexcludable, but rival. Explain whether the following goods are rival or nonrival and whether they are exclusive or nonexeclusive: 1). Broad television, 2). Cable television, 3). Beaches, 4). National defence, 5). Fishing grounds 56 Chapter 1 D1 D2 D When a good is nonrival, the social marginal benefit of consumption (D) , is determined by vertically summing the individual demand curves for the good. Efficient Public Good Provision Output 0 Benefits (dollars) 1 2 3 4 5 6 7 8 10 9 $ $ $ Marginal Cost $ Efficient output occurs where MC = MB at 2 units of output. MB is $ + $ or $. 57 Chapter 1 Example ? There are three groups in a munity. Their demand curves for public television in hours of programming, T, are given respectively by ? W1=$150T ? W2=$2002T ? W3=$250T ? Suppose public television is a pure good that can be produced at a constant marginal cost of $200 per hour. ? A. What is the efficient number of hours of public television? ? B. How much public television would a petitive private market provide? 58 Chapter 1 Public Goods ? Public Goods and Market Failure ? How much national defense did you consume last week? 59 Chapter 1 Public Goods ? Free Riders ? Ther