Ing David Slavata PhD Public Finance A The Market Failures Public Goods Externalities Imperfect Competition Asymmetric Information The Classification of goods ID: 1027438
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1. Public goods externalitiesIng. David Slavata, Ph.D., Public Finance A
2. The Market FailuresPublic GoodsExternalitiesImperfect CompetitionAsymmetric Information
3. The Classification of goodsInstitutional viewEconomical view
4. Institutional viewMarket goodsNon market goods
5. The Market GoodsThe market goods are distributed and alocated by the market. The market price, which is the equilibrum of supply and demand is the main factor to whom it will be distributed.
6. The non market GoodsThe distribution of goods do not depend on the market price. Mostly it depends on the decision of the government.
7. The state Price regulationAdministrative pricesCost based pricesTime directed pricesMoratorim
8. The Economical viewExcludabilitythe possibility to exclude anybody from the consuming of the good.Rivality- means the possibility of reducing the quantity of available good by the consumption to any other.
9. Rivalrous Non rivalrous Exludable Private good Club goodNon excludable Common property Public good resources
10. The samplesPrivate goods- pencil, bread...etc.Public goods- roads, city lights, defense, police..etc.Common property resource- lake for fishing Club goods- Cabel TV, NATO
11. The public goodsColectively consumedPrivately consumedSemiprivately consumed
12. The samplesMarket private goodNon market private goodNon market public goodMarket public good
13. ExternalitiesA cost or benefit that occurs when the activity of one entity directly affects the welfare of another in a way that is outside the market mechanism.
14. The classificationPositive externalitiesNegative externalitiesReciprocial
15. The negative externalitiesThere is a negative effect from the production of the entity.Pollution Chamicals
16. The positive externalitiesThere is a positive effect from the activity of the entity. Agriculture- bio agricultureFisherman societies
17. ReciprocialThere is a mutual benefit from the entity activity. Sample: Beekeeper and gardener.
18. The instrumentsTaxesFeesEmmission permitsSubsidiesLegal protection
19. Pigouvian taxation a tax devised by Arthur Cecil Pigou (1877–1959) to remove the negative external impact. According to Pigou, environmental polluters must pay a tax equal to the difference between actual and social costs when producing a commodity or using a polluting technology.
20. The Coase TheoremIn a competitive economy with complete information and zero transaction costs, the allocation of resources will be efficient and invariant with respect to legal rules of entitlement.The problem of negative externality can be solved without the need for governmental intervention.The condition of clear property rights.
21. The SAMPLEFactory owner and farmerpollution causes the harm to the farmer for 100 USD as negative externalitythe externality can be eliminate by the investing of 50 USD to the factoryIn case of the valid claim of the farmer the factory owner gladly will invest 50 USD to avoid the paying the 100 USD to the farmer.In case of valid claim of the factory owner the farmer would gladly pay 50 USD to the factory owner to invest to his factory to prevent the pollution which avoid the harm of the farmer in sum of 100USD.
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