1.4.2 Types of Market Failure 1.4.2.4 Lack of Public Goods Public Goods Vs Private Goods? The Free Rider Problem? Implications of Government provision of Public Goods? Contents Public Goods Vs Private Goods A02 - Using the concepts of
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Presentation Transcript
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1.4.2 Types of Market Failure 1.4.2.4 Lack of Public Goods<br>
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Public Goods Vs Private Goods?
The “Free Rider Problem”?
Implications of Government provision of Public Goods? Contents<br>
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Public Goods Vs Private Goods A02 - Using the concepts of rivalry and excludability, and providing examples, distinguish between public goods (non-rivalrous and nonexcludable) and private goods (rivalrous and excludable).<br>
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What are Public and Private Goods? Definition: Public Goods
Are goods that when consumed by one person can be consumed in equal amounts by the remainder of society (non-rivalrous), and where the possibility of excluding others from consumption is impossible (non-excludable). Definition: Private Goods
Are goods that when consumed by one person, they are not available to others (excludable and rivalrous)<br>
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Public Goods - Qualities<br>
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Public Goods Vs Private Goods<br>
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Public Goods Vs Private Goods<br>
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Public Goods Vs Private Goods<br>
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Public Goods Vs Private Goods<br>
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Public Goods Vs Private Goods<br>
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Public Goods Vs Private Goods<br>
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Activity 1 Activity 1 – Read the following story and circle or highlight each PUBLIC GOOD or QUASI PUBLIC GOOD and PRIVATE GOOD that is mentioned.<br>
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Activity 1<br>
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Activity 1<br>
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Activity 1<br>
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Activity 1<br>
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Activity 1<br>
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The “Free Rider Problem” A02 - Explain, with reference to the free rider problem, how the lack of public goods indicates market failure.<br>
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The “Free Rider Problem” Definition: Free Rider
Free riders are those who enjoy the benefits of a public good without having to pay, because it is impossible to exclude them.<br>
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Free Rider As Market Failure Market for Street Lighting Welfare
Loss No incentive for private enterprise to produce street lighting for which they are unable to collect payment from all who benefit from consuming the good. Hence market under provides by Q1 to Qopt.<br>
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Free Rider As Market Failure<br>
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Free Rider As Market Failure<br>
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Free Rider As Market Failure<br>
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Case Study 1 – Fire Services Levy Volunteer Fire Brigades Victoria, farmers and insurance brokers have welcomed changes to the way fire services are funded.
29 August, 2012 11:48AM AEST
ABC Gippsland<br>
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Case Study 1 – Fire Services Levy Volunteer Fire Brigades Victoria, farmers and insurance brokers have welcomed changes to the way fire services are funded.
29 August, 2012 11:48AM AEST
ABC Gippsland<br>
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Case Study 1 – Fire Services Levy Volunteer Fire Brigades Victoria, farmers and insurance brokers have welcomed changes to the way fire services are funded.
29 August, 2012 11:48AM AEST
ABC Gippsland<br>
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Implication of Government Provision of Public Goods A03 - Discuss the implications of the direct provision of public goods by government.<br>
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Direct Provision of Public Goods<br>
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Direct Provision of Public Goods<br>
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Public Goods Vs Private Goods?
The “Free Rider Problem”?
Implications of Government provision of Public Goods? Conclusion<br>