Journaling of Chapter 11: Public goods and Common Resources

     Chapter 11 addresses the topic of public goods and common resources. Both of these are free for consumers to use. Though this sounds like a positive thing, it actually causes the market forces that usually allocate resources to be absent. Thus, public goods and common resources are not being consumed in the proper amounts. This is when government can choose to step in and fix this market failure and improve the overall economic well-being. There are four types of goods: private goods, public goods, common resources, and good produced by natural monopoly. We can describe these goods by their excludability and the rivalry in consumption. Public goods are not excludable and have no rival in consumption. Common resources are rival in consumption but not excludable. In these cases, they lead to market failure because property rights are not clearly established. Basically, the main thing to remember is that public goods are underproducced and common goods are overconsumed. The government can solve these problems by selling pollution permits, as we learned in Chapter 10, regulating private behavior, or providing the public good.

     I would give this chapter a difficulty rating of 1 out of 3. In this chapter, though there are four different good categories, the readers are only told more in depth about public goods and common resources. I think this is because both of these are not excludable, meaning they are free. These two are the ones most likely to cause negative externalities which serves as a good follow up from the last chapter.