ECON 120
Monday, December 2, 2019
Lecture Notes
MSB > MSC, Quantity
INCREASES
MSC > MSB, Quantity
DECREASES
But MPB < MSC, Quantity
= 0, rely on private supply
MSB = vertical sums of
MPBs
Possible Outcomes
1. Too much Q of public
good.
2. Too little Q of public
good.
Common Resource, Non-excludable,
depletable (vital in consumption)
Examples:
Biodiversity, Logging on Public
Land, Fishing and Whaling (Dolphins and Whales), Overplanting, Use of Good Air
How to deal with common
resources:
1. Tax
2. Tradeable permits
3. Privatize (make
excludable)