Why are goods that are non-rivalrous and excludable (such as an uncrowded library or art gallery) often provided by the government?
◦ The marginal private benefit to the last user is greater than the marginal private cost.
◦ The marginal cost to society of providing access to one more user is zero, so it is allocatively efficient to provide this good at a price of zero.
◦ Because when these goods are used beyond capacity, they would not be provided by private firms.
◦ The marginal benefit to society of providing access to one more user is zero, so it is allocatively efficient to provide this good at a price of zero.
◦ Because the government can provide these goods with fewer resources, it is productively efficient.
A DNA library.
British Library
Worldly Goods
Ecosystem goods and services and monetary values
Draw an Edgeworth box for two consumers over two goods