Microeconomics › Section M · Positive externalities and public goods › Topic M.3
Public goods and common resources
Markets run on prices, and prices need two things a market can enforce: keeping non-payers out, and letting each buyer have what they bought. Some goods break both rules - ones everyone shares without paying, and ones everyone can take without owning. The first starve; the second collapse.
In this topic
- Market failure, the umbrella term
- Two questions that sort every good
- Public goods: the free-rider's feast
- Worked example: summing the benefits vertically
- The valuation problem
- Common resources: the tragedy of the commons
- Worked example: the lake's fatal arithmetic
- Tools for the commons
- Club goods: the fourth corner
- Common mistakes to avoid
- Key takeaways
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