X hits on this document

138 views

0 shares

0 downloads

0 comments

1 / 39

Market Failure and Government Intervention

SECTION 1.OBJECTIVES, CONSTRAINTS, AND CHOICES2

Table 17-1  Objectives, Constraints, and Choices3

Figure 17-1.  Types of Constraints4

SECTION 2.  STUDIES AND OBJECTIVES4

A.  Minimizing Error of Prediction: Forecasts5

B.  Maximizing Sales:  Demand, Marketing, Advertising Studies5

C.  Maximizing Output or Minimizing Cost: Supply and Cost Effectiveness Studies5

D.  Profit Maximization6

E.  Maximizing Net Present Value:Capital Budgeting6

F.  Maximizing Net Benefits:Cost Benefit Analysis7

Table 17-2  Studies Used in Organizations7

G.  Maximizing Social Welfare: Industry Studies and Other Studies of Government Intervention8

H.  Summary of Study Types.9

SECTION 3.  THE ECONOMIC BASIS FOR GOVERNMENT INTERVENTION: Market Failure9

A.  Market Power9

deadweight welfare loss9

B.  Externalities10

social optimum11

The net social benefit11

consumption externalities11

marginal social value11

social marginal cost (or social supply)11

production externalities11

social optimum11

marginal social value11

consumption externality11

Figure 17-4. Social and Private Demand12

nationalize13

public enterprise13

C.  Divisibility and Excludability13

pure private good or service14

a pure public good14

excludability14

free riders14

indivisible14

public bad14

D.  Information14

E.  Equity15

Lorenz curve15

quintiles15

Gini Coefficient15

Table 17-315

               Figure 17-5  Lorenz Curve17

Figure 17-5  Lorenz Curve17

F.  Dynamic Market Failure17

Figure 17-6a.  Stability18

Figure 17-6b  Limit Cycle Stability19

Figure 17-6c  Instability20

Cobweb Model20

Figure 17-6d COBWEB MODEL21

Replenishable Resources21

Non-replenishable resources22

SECTION 4.  GOVERNMENT INTERVENTION22

Document info
Document views138
Page views138
Page last viewedFri Jan 20 06:06:32 UTC 2017
Pages39
Paragraphs470
Words13660

Comments