Microeconomics,, 16th Canadian Edition

States, many economists have expressed concern about the growing concentration of economic power within large financial institut ...

16.3 Market Failures The term market failure describes the failure of the market economy to achieve an efficient allocation of r ...

We now examine four situations in which the free market fails to achieve allocative efficiency—market power, externalities, non- ...

They do not try to turn imperfectly competitive industries into perfectly competitive ones. Nor do they try to induce such firms ...

Externalities Recall from Chapter 12 that in order for the economy to be allocatively efficient, marginal benefit (or value) mus ...

Figure 16-1 Externalities Lead to Allocative Inefficiency from using the product, however intangible those benefits may be. Soci ...

When there is an externality, either too much or too little of the good is produced. If the market for this good is perfectly co ...

neighbours’ view and the value of their property. Yet the individual renovator ignores the benefits that her actions have on the ...

With a positive externality, a competitive free market will produce too little of the good. With a negative externality, a compe ...

Table 16-1 Four Types of Products Non-Rivalrous and Non-Excludable Goods Economists classify goods and services into four broad ...

Free markets cope best with rivalrous and excludable goods—what we here call “private” goods. The table gives examples of goods ...

unless you buy it first. A radio signal is not excludable; the signal is there for anyone to access. Private Goods Most goods an ...

graze on common land surrounding the village. Each additional sheep or cow permitted to graze on that land benefited the owner o ...

common-property resource. Applying Economic Concepts 16-1 examines the depletion of the world’s fisheries.  Applying Economic C ...

substituting smaller, less desirable fish for the diminishing stocks of the more desirable fish and by penetrating ever farther ...

Excludable but Non-Rivalrous Goods countries, such as China, Phillipines, and Indonesia. As a result, many developing countries ...

Goods that are excludable but not rivalrous are sometimes called club goods. Many of the obvious examples of these—such as art g ...

on a summer Saturday morning? What happens on Highway 401 outside Toronto at rush hour? The answer is congestion. When congestio ...

Finally, some goods are neither excludable nor rivalrous. These are called public goods or sometimes collective consumption good ...

Figure 16-2 The Optimal Provision of a Public Good How much of a public good should the government provide? It should provide th ...