TAILIEUCHUNG - Lecture Microeconomics (5th edition): Chapter 17 - Besanko, Braeutigam

Chapter 17 - Externalities and public goods. This chapter presents the following content: Motivation, inefficiency of competition with externalities, allocation property rights to restore optimality, public goods. | Externalities and Public Goods Chapter 17 Copyright (c)2014 John Wiley & Sons, Inc. 1 1 Chapter Seventeen Overview Motivation Inefficiency of Competition with Externalities Allocation Property Rights to Restore Optimality The Coase Theorem Problems with the Coase Approach Other Methods to Restore Optimality – Standards and Fees Public Goods A Taxonomy Demand for Public Goods Free Riders and the Supply of Public Goods Chapter Seventeen Copyright (c)2014 John Wiley & Sons, Inc. 2 Chapter Seventeen Externalities Definition: If one agent's actions imposes costs on another party, the agent exerts a negative externality, while if the agent's actions have benefits for another party, the agent exerts a positive externality. Network externalities, snob effects Wind chimes When externalities are present, the competitive market may not attain the Pareto Efficient outcome. Copyright (c)2014 John Wiley & Sons, Inc. 3 Chapter Seventeen Inefficiency of Competition with Externalities Copyright .

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