Please enable JavaScript.
Coggle requires JavaScript to display documents.
Part 4: Public Goods, Imperfect Info, Inequity - Coggle Diagram
Part 4: Public Goods, Imperfect Info, Inequity
Imperfect Info
-
Public Education
Benefits: Reduces in Long Term, Tackles root problem
Limitations: Takes a long time, can be costly
Rules and Regulations
Benefits: Legally binding, mandatory
Limitations: Costly for monitoring, time lag
Public Goods
Characteristics
Non-Excludable: When the good or service is produced, there is no clear way to exclude consumers who do not pay
Since when just one person pays, everyone will benefit, no one is willing to pay, thus with no price set, no goods produced, market fails
Non-Rejectable: When good is produced, it is not possible to refuse the consumption
Non-Rivalry: When good is consumers by one person, it does not diminish the amount available to any other person
Since the marginal cost for producing additional unit is zero, the equilibrium point is when P=0, since no company will charge P=0, market fails
Inequity
Causes
Factor Endowment (Basically, inequalities in wages and income)
Demand for output produced by factors (High demand for produce=high demand for labour= higher wages)
Globalisation (Domestic may suffer, International will prosper)
Government Policies (E.g. Reducing wage taxes to increase foreign investment worsens the income inequality)
Tackling Inequity
Progressive Tax
Tax more for rich, less for poor
-
Limitations: Fear of brain drain, lesser motivation to work more, cuz more tax
Transfer Payments
-
Limitation: Capability of govt, if govt corrupt, byebye
Minimum Wage Legislation
Set a minimum wage for workers, so as to earn more wages
Limitation: Surplus of labour = unemployment rife, affect EG (Macro)
Education
-
Limitation: Long time, money required, not equally beneficial
Why Govt May Fail?
-
-
-
Conflicting objectives (esp macro, or benefits for poor)
Unintended consequences (hasty policies may lead to long term failures, or say if a govt decide that this are be saved for environmental protection, companies may move elsewhere in country, harming more environment instead)