Economics: Impure Public Goods
Inadequate protection and management of marine resources have a negative impact on the environment. The oceans house both ecological processes and essential species and provide food for many people especially to the poorest nations. Despite these benefits, the ocean habitats and species continue to be endangered. This paper discusses the incentives to conserve the marine biodiversity within the framework of impure public goods.
Impure Public Goods
An impure public good is a good that satisfies the public and meets the conditions of being non-excludable and non-rival only to some degree but not fully. The impure public goods are often excludable. Further analysis of an impure public good has two broad classes of goods that include club goods and variable use public goods. The club goods are financed and sustained by a group of people having precise membership rules. The variable use public goods include facilities such as public transit systems and roads. Such facilities are not replicable and provide services to their potential users.
The impure public goods raise issues that pertain to the allocation because they can be subject to maintenance in a manner that will protect everyone else in range with marginalized communities. Some parts are also subject to leasing for private concerns such as the use of garden mulches or canals. The provider of an impure public good can also influence the degree of congestion by regulating the number of people who use the good or by controlling the frequency with which people can access the impure public goods. For instance, access to many recreation facilities is under control and regulations.
Types of Externalities Associated with Impure Public Goods
An externality is an impact that the actions of one person may directly undermine the well-being of another in a manner that is not a function of the market prices. The externalities occur whenever the production or consumption by one person affects others. If the actions of one person have a positive impact on the other, the externality is positive and vice versa. An impure public good has significant externalities that make it impossible for the control and regulation of property rights. The externality benefits become extensive in the sense that the social assumption of the product becomes economically efficient.
The positive externalities of a good are also known as the spillover effects and affect those who are not directly involved with the impure public goods. However, goods that have positive externalities send an implication that those who are controlling the availability of the good charge a given amount of a fee. However, the fee charged for the use of such good does not commensurate with the benefits that the product has to offer because of the nature of the externalities. Thus, externalities can be good or bad. However, their supply prices are not a reflection of the cost of activities because there has to be input such as the environment, and the price might not be appropriate.
The technology of Public Goods Supply
The lawful owners of impure public goods are not allowed to treat them as ordinary market commodities by selling them even to the highest bidder because the goods are exclusive and partially divisible. Therefore, the supply of these goods should conform to some particular conditions in order to be socially efficient. An undersupply of public commodities may only be attributable to additive supply technology and weakest link supply technology. The emergence of new technologies also enhances the human mobility and the movement of goods and services.
There have also been government involvement that aims towards the implementation of the forest protection agencies, more so in areas with higher biodiversity. The governments are also curtailing spending and their ability to invest in public provision. However, their actions are usually compromised and they undermine the supply of public goods. In addition, there are those situations whereby the public provision of a good or service does not take place because nobody can be excluded from using the good after its provision. The use or consumption of the good does not limit its availability. Anybody willing to supply such goods privately might feel they are at a disadvantage because of the possibilities of free riding. Moreover, there may also be a predicament whereby the provision of good is constrained because its provision either does not exclude others or diminishes its availability.
According to the weakest link concept, the socially available amount of a public commodity available to the public is the minimum of the individually provided quantities. The weakest link model is a description of some predicaments whereby individuals of a social group have a veto achieve. The concept of the best shot rule implies that the socially available amount is a maximum of the individual quantities. The best shot model is applicable whenever different teams are competing for the benefits that a public good provides, which undermines the supply of public goods. However, going by the standard summation formula of the theory of public goods, an undersupply of a public good derives moderation from the weakest link function. The supply of public goods, thus, shows that free-riding takes place more than the stipulations that are laid in the traditional theory.
Economic Incentives Created for Impure Public Goods with Different Technologies of Public Goods Supply
The gains of the secondary incentives created by impure public goods are of secondary importance. The economic incentives mainly comprise of tradable rights and taxes. However, the corresponding authorities should have a specific target before issuing any taxes or levying any rights. The main incentives that are mostly serving for the creation of impure public goods include quota trading and taxes. The degree of optimism tax levels are a function of the institutional settings, and the role the taxation plays in the creation of incentives is through the spillover internalization.
An optimal tax as an economic incentive is an implication of the foregone non-use values. Using quota trading as an economic incentive might necessitate the development of a quota or an aggregate cap as well as an issuance that can be traded. The government may, thus, decide to permit the tradable permission at a cost-free charge. However, if the government decides to attribute a cost to the quota trade, then it can engage in an auction by auctioning it to the highest bidder. The economic incentives might have an impact on enforcing the costs and possibly increase revenues. There are also the benefits that might stem from embracing the economic incentives that are equally important for the purposes of conservation of the public goods.
Even though it is the prerogative of the government to choose between the necessary incentive between taxes and quotas, the decision is subject to uncertainty between the marginal costs function and the marginal benefits function. The negative incentives measures such as pollution taxes might be set in place in order to discourage the performance of any activities that are harmful to biodiversity. The negative incentives are vital for the protection of public and impure public goods by instilling some penalties to those who use these goods inappropriately.
The degree of congestion of public goods can be leveraged by reducing the control of the frequency people can access these goods. The impure goods can face both negative and positive externalities. The positive externalities of impure goods are usually experienced by people who do not use these goods directly. The law does not allow owners of the impure public goods to sell them directly to the market because these goods are partially divisible and exclusive.
About the author
Emily Stafford is a writer of articles about how to write an a level english literature essay. She works in a company that provides different academic papers such as essays, research papers, coursework, etc. Also, before this, Emily has been a singer in girl pop-band. It was a colorful and impression period in her life. Now she has no time to touring because she has small kids.