| What is a Non-Excludability good? | -This is when People can’t be Stopped from Consumption of the Good - even if they haven’t Paid for it. Individuals will Benefit from the Flood Defences [Example of Public Good] even if they didn’t Pay for it, or Build it. |
| What is a Non-Rivalry/Diminishability good? | -If one person Benefits from a Good, it is not to say the Others benefiting just as Much. Flood Defences benefitting more People will not have an effect to the Benefit of the First Person [Basically Everyone Benefits the same Amount]
-This means also that the Good has no Marginal Cost - No Additional Cost to Extend the Good to 1 More Person |
| Give some Examples of Public Goods | -Firework Displays. Fireworks are Non-Excludable - People can see the Fireworks and can’t really be Stopped for such and People can all enjoy Equally. No Cost if 1 More Person watched the Firework Display.
-Street Lights. Everyone can ‘Consume’ [See the Road] the Street Light and not be stopped and more People ‘Consuming’ the Street Light will not Diminish the Benefit or Availability for others |
| What are Private Goods? Use Biscuits as an Example | -These are Goods that are Excludable - you can Stop someone Consuming them - and also Rivalry.
-If someone eats a Biscuit - that means non one else can eat it - there is a Marginal Cost. |
| What are Non-Pure, or Quasi Public Goods? | -These are Goods that have some Characteristics of a Public Good, but not all. |
| Use Roads and explain why its a Quasi Public Good | -Roads are often Free for Usage [Non-Excludable] and 1 Person using the Road doesn’t Diminish the Benefit or Availability for Others using it too [Non-Rivalry]
-However, Tolls can make it Excludable by Pushing away those who Don’t want to Pay to use the Road.
-Congestion will make Roads have Rivalry Characteristic as then a Limit will be in Place to the Number of People who can be at the Road at any one Time |
| What is the Free Rider Problem? Why is this a Problem for the Price Mechanism and the Free Market?
-Who will have to Intervene? | -When the Public Good is Dished out, it is Impossible, due to its Non-Excludable trait, to stop People from Benefitting from the Good, even if they did Naught
-Consumers therefore won't Pay for a Public Good that they can get for Free because other Consumers have paid for it
-If People decide to Wait for someone to Provide and Pay for the Public Good Provision, then Nothing will Happen
-Making a Price for the Public Good is Hard, as Consumers, to get a Low Price, will Undervalue, and Firms will Overvalue [High Price]
-Overall, this means the Government must Intervene to Provide |
| Why can the Free Rider Problem extend into the Environment? Use Air as an Example | -Air is a Public Good - Non-Excludable and Non-Rivalry
-Clean & Dirty Air will Cost the Same [Nothing] so making Clean Air Scarce won't Rise its Price up and Deter People from 'Usage'
-This means the Benefits of not Polluting the Air, or Cleaning the Air, will not be Restricted to those who 'Paid' for the Clean Air [Non-Diminishing] so in a Free Market, its Rare to see that Happen |
| What does 'Tragedy of the Commons' Mean? | -An Idea that says People, acting in a Maximising Behaviour, will Overuse a Common Resource without caring for the Depletion of the Resource, or the Degradation |
| What can the Government do to try and Combat the Misuse of the Environment due to the 'Tragedy of the Commons' | -Simple. Governments can go via Taxation [for Polluting air eg] Subsides [To Carbon Capture and Eco Friendly Firms] Legislation or Government Spending [National Parks?] |
