PPT-Market Failures: Public Goods and Externalities

05 McGrawHillIrwin Copyright 2012 by The McGrawHill Companies Inc All rights reserved Market Failures Market fails to produce the right amount of the product Resources may be Overallocated. Yale Braunstein. March 2011. Quick intro to “Consumers Surplus”. Actually, the sum of CS & PS. Consumers gain from price decreases. PS = Profit. Monopoly works by restricting output & raining price, therefore results in “deadweight welfare loss”. 10. Externalities . Recall: Adam Smith’s “invisible hand” of the marketplace leads self-interested buyers and sellers in a market to maximize the total benefit that society can derive from a market. . Externalities. Essential Questions. Why are markets inefficient in the presence of positive and negative externalities?. How do we identify the area of efficiency loss (deadweight loss) when externalities are present?. Ian . Parry. Fiscal Affairs Department, IMF . Disclaimer: The views expressed herein are those of the author and should not be attributed to the IMF, its Executive Board, or its management.. 2. Carbon. Section 2.4 Equity . in the distribution of income. 1. Define . community surplus, social efficiency, and Pareto optimality. Explain that the best allocation of resources from society’s point of view is at competitive market equilibrium, where . This web quiz may appear as two pages on tablets and laptops.. I recommend that you view it as one page by clicking on the open book icon at the bottom of the page.. 5a. Price Ceilings and Price Floors. Chapter 10. Outline. External costs, external benefits, and efficiency. Private solutions to externality problems. Government solutions to externality problems. . 2. Introduction. Antibiotics are overused. . The VCR. DVD players. Definition. . A . network externality exists when adoption is characterized by complementarily in consumption or production. . . Tirole. , J. 1988. Theory of Industrial Organization. Cambridge, MA: MIT Press: . PPA . 670. Policy Issue Analysis. Dr. Butz. Economic Freedom. Economic . freedom (from an economic efficiency standpoint) . refers to the degree to which private individuals are able to carry out voluntary exchange without government involvement. s. (. CH. 4007. ). Lectu. r. e. . 6. Market failure: public goods and externalities. Lecturer. :. . Xian. Learning Objectives. Explain why free markets sometimes fail to produce optimal outcomes.. Unit 2: How Markets Work. Market Failures. Sometimes markets are not able to provide the goods and services desired by consumers or which can be efficiently produced by suppliers. This situation is called a . Laura Jackson Young. Market Efficiency. ‘Markets are usually a good way to organize economic activity’. In absence of market failures. , the competitive market outcome is efficient. Maximizes total surplus. Chapter 9. The Nice Assumptions. No Market Power. Individuals have. Equal access to information. Equal access to the market. No market failure. Markets. Form quickly when needed. Function quickly & effectively. January 2017 .  . Higher education and public goods. . Simon Marginson.  . Director . of the ESRC/HEFCE Centre for Global Higher Education . Professor of International Higher Education. UCL Institute of Education.