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goods - Coggle Diagram

- - - - a person who receives the benefit of a good but avoids paying for it
        
        if good is not excludable, ppl have incentive to be free riders, bc. firms cannot prevent non-payers from consuming the good
        
        result: the good is not produced, even if buyers collectively value the good higher than the cost of providing it
    - - national defense
      - knowledge created through basic research
      - fighting poverty
  - - - Cannot prevent free riders from using
      - Little incentive for firms to provide
      - Role for govt: seeing that they are provided
    - - externality
        
        if everyone thinks of their individual interest first, everyone else does not benefit
        
        the public good is ignored and the individual cannot benefit at the end of the day too
        
        effect of externalities:
        
        if negative externality
        
        market quantity larger than socially desirable
        
        if positive externality
        
        market quantity smaller than socially desirable
        
        to remedy the problem
        
        "internalize the externality"
        
        tax goods with negative externality
        
        subsidize goods with positive externalities