Chapter 16 public choices, public goods, and healthcare

Governments have 3 functions
They establish and maintain property rights, provide non market mechanisms for allocating scarce resources, and redistribute income and wealth
Public Choice and the marketplace
Voters
Firms: evaluate politicians’ policy Proposals… pay some of the taxes… make Campaign Contributions: and are a major source of funds for political parties.
Politicians
Bureaucrats: are the public servants who work in government departments, administer tax collection, delivery of public goods and services, administer rules and regulations
political equilibrium
choices of voters, firms, politicians, and bureaucrats are all compatible
excludable good
prevent some people from using it… a concert ticket
nonexludable good
impossible to prevent anyone from benefiting from it. The services of he LAPD
rival good
if one person’s use of it decreases the quantity available for someone else
non rival good
if one person’s use of it does not decrease the quantity available for someone else. The services of the LAPD and a concert on network television are non rival
private goods
a private good is both rival and excludeable. A can of coke and a fish on east point’s sea food farm are examples of private goods
public goods
both non rival and nonexludable. A public good simultaneously benefits everyone, no one can be excluded from its benefits.
common resources
good is rival and nonexludeable… Ocean fish… rival because a fish taken by one person isn’t available for anyone else
natural monopoly goods
is a good that is non rival but exludable. Potential consumers can be excluded if they don’t pay but adding one more user doesn’t rival other users, so marginal cost is zero…. internet cable television
Healthcare
Care supplied by doctors and other professionals, and insurance.
Education
Government provide public education because it brings benefits that spill over to others external benefits
The free rider problem
there is no profit in public goods because… someone enjoys the benefits without paying… Tax free market capitalism to create roads for example…. can’t be exluded… nonrival
Marginal Social Benefit from a public good
sum of the marginal benefits of all the individuals at each quantity

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