Topics:

• Market and valuing of

public good
• Allocating property right
to reduce externalities

Presented by:
Maryam Fatima
Summiya wasim
Seerat Azeem
Content:
1. Market for public good
2. Valuing of public good
3. Allocating property right to reduce
externalities
Public good
A commodity or
service that is
made available to
all members of a
society, typically
administrated by
governments and
payed for
collectively
through taxation
Public Goods
• Pure Public good share two characteristics
• _Nonrival_ cost of another person
consuming the good is zero.
• I.e: national defense is nonrivalrous; it
cost nothing for the united state military to
defend other country.
• _Nonexcludable_ very expensive to
prevent others from consuming the good.
• I.e: clear air is nonexcludable
Examples of public good
Valuing of public good
• Valuing public good is essential because they
benefits Soviet as a whole
• Economist use three methods like
• Contingent valuation
• Revealed preference
• Cost benefit
Contingent valuation

• One common approach is called contingent

valuation, where individuals are asked how
much they would be willing to pay to have
access to a public good or how much they
would be willing to accept as compensation
for its loss. This helps in determining the
value people place on the good
Revealed preference
• Another way to measure the value of public
goods is to infer it from people's behavior in
related markets. This method is based on the
idea that people's actions reflect their
underlying preferences and trade-offs. For
example, economists can use the hedonic
pricing method to estimate the value of
clean air by looking at how house prices vary
with air quality.
Cost Benefit

• Cost-benefit analysis is also used to assess

the value of public goods. It involves
comparing the costs of providing the good
with the benefits it generates for society.
This helps policymakers make decisions
about allocating resources to public goods.
Allocating property right to
reduce externalities
Allocating property right to
reduce externalities
Allocating property right to
reduce externalities