Chapter 11

A relatively easy chapter, chapter 11 makes sense to me, but the book goes into how the distinctions between public goods and common resources (and some of the other types of good) can become fuzzy and so I worry that labeling the types of characteristics can become slightly “subjective” in a sense, or at least easy to miss a detail and miss label it. This chapter begins to split goods into four categories according to two characteristics: is the good excludable, and is it rival in consumption. The categories discussed were public goods (neither excludable nor rival in consumption) and common resources (not excludable but they are rival in consumption). The other two are private goods (excludable and rival in consumption) and a good produced by a natural monopoly (excludable but not rival in consumption). The free-rider problem eludes to how certain goods cannot be in a private market because free-riders (those who benefit from a good but avoid paying it) don’t pay for the good and then the market doesn’t thrive or the supplier doesn’t have an initiative to supply the good because they don’t receive a profit. This is when the government steps in to either supply the good for the public through taxes/subsidies, or initiatives. A cost-benefit analysis studies the costs and benefits of providing a good to society, and this can be difficult in certain situations, such as dealing with people’s lives. Overall, I feel pretty good about the chapter, and just hope that the different concepts don’t become muddled in my head.