Public Goods - University of California, Berkeley

Public Goods

131 Undergraduate Public Economics Emmanuel Saez UC Berkeley

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OUTLINE Chapter 7 7.1 Optimal Provision of Public Goods 7.2 Private Provision of Public Goods 7.3 Public Provision of Public Goods 7.4 Conclusion

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PUBLIC GOODS: INTRODUCTION Private trash collection, financed by a voluntary fee paid by neighborhood residents, faces the classic free rider problem. Goods that suffer from this free rider problem are known in economics as public goods.

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PUBLIC GOODS: DEFINITONS

Pure public goods: Goods that are perfectly non-rival in consumption and are non-excludable

Non-rival in consumption: One individual's consumption of a good does not affect another's opportunity to consume the good.

Non-excludable: Individuals cannot deny each other the opportunity to consume a good.

Impure public goods: Goods that satisfy the two public good conditions (non-rival in consumption and non-excludable) to some extent, but not fully.

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7 . 1

Optimal Provision of Public Goods

Chapter 7 Public Goods

? 2007 Worth Publishers Public Finance and Public Policy, 2/e, Jonathan Gruber

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