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1、Chapter4Efficiency:PublicGoodsandExternalitiesChapteroutlineTherationaleforgovernmentproductionofgoodsandservices.1.PublicGoods,PrivateGoods,andGoodswithExternalitiesNonrivalryNonexcludabilityFreeRidingandPublicGoodsSomeQualificationsFree-ridingandtheStreetLights(ATrueStory)Identifying
2、PublicGoodsPublicGoodsVersusPrivateGoodsDemand,Price,andLevelofOutputWhoPaysforPublicGoods?LocalPublicGoods,ClubGoods,andCongestibleGoodsExternalitiesPositiveExternalitiesNegativeExternalitiesCreativeSolutionsPropertyRightsandtheCoaseTheoremTaxIncentivesandVouchersTheGarbageDilemmaShift
3、ingtheDemandCurveOtherProviders1.PublicGoods,PrivateGoods,andGoodswithExternalitiesPublicgoodshavetwocharacteristics:nonrivalryandnonexcludability①nonrivalryAgoodthatisnonrivalinconsumptioncanbeconsumedbyanynumberofpeoplesimultaneously,withoutdiminishingtheamountavailabletobeconsumedbyo
4、thers.②nonexcludabilityThistermdescribestheinabilitytokeeppeople,specificallynonpayers,fromconsumingthegoodorservice.Itistheproblemofexcludingnonpayersratherthannonrivalrythatisoftenthedeterminingfactorincallingforpublicproduction.Exclusiontechnique:innovationsintechnologyandhighfine.2.
5、IdentifyingPublicGoodsAllpublicgoodscanbeclassifiedaccordingtothedegreeofrivalryandexcludabilityintofourclasses.lowrivalry,lowexcludabilitygoodsarepublicgoods;highrivalry,highexcludabilitygoodsareprivategoods;lowrivalry,highexcludabilitygoodsarelocalpublicgoodsorclubgoods;highrivalry,lo
6、wexcludabilitygoodsarethosethatcreatepositiveornegativeexternalities.Figure4-1ClassifyingGoodsandservicesbyRivalryandExcludability①Publicgoodsversusprivategoods②Demand,price,andlevelofoutputForpublicgoods,demandisaddedverticallyratherthanhorizontallytodeterminetheoptimumquantity.Figure4
7、-2MarketDemandandOptimalOutputforPrivateGoodsFigure4-3Demand,Supply,andEquilibriumintheMarketforaPublicGood③Whopaysforpublicgoods?Firstofall,thereisthechallengeofdeterminingA’sandB’svaluationsofthepublicgoodssothateachcanbechargedtheappropriateprice.forgovernmentthefirstchallen