articles and amendments

• What is the business proposition discussed in Week 1 of the Theory of Public Goods?


  A fireworks show at the USC track field
• What are the costs associated with the fireworks show?


  Renting the field, hiring staff, and hiring a fireworks vendor
• What is the ticket price for the fireworks show?

  $20 for general admission and $15 for students
• What is the issue with potential customers buying tickets for the fireworks show?

  Many may choose to free-ride by watching the fireworks from outside
• What is the exclusion problem in the context of the fireworks show?


  It is difficult or costly to exclude nonpayers from viewing the fireworks
• Who are referred to as freeriders?


  Those who benefit from a good or service without paying
• What assumption does economics make about people's behavior regarding public goods?


  Economics assumes that people are "greedy," especially if others are free-riding
• What type of good is a fireworks show classified as?

  A nonrival good
• Why is a fireworks show considered a nonrival good?


  One customer's enjoyment does not diminish availability for others
• How does a fireworks show differ from tangible goods like jeans or phones?


  A fireworks show does not have product scarcity, while tangible goods do
• What is the distinction between the book itself and its content regarding rivalry?


  The book itself is rival, while the content is nonrival
• How is watching a movie in a theater seat classified in terms of rivalry?


  Watching a movie from a certain seat is rival, but watching the movie itself is nonrival
• What are the key questions in the Theory of Public Goods?


  • Rival or non-rival: Does consumption diminish availability to others?
  • Excludable or non-excludable: Is it feasible to exclude nonpayers?
• What are examples of private goods?


  Jeans, phones, and physical books
• What are examples of common pool goods?


  Fresh air
• What are examples of club goods?


  Netflix, Spotify, and Wi-Fi
• What are examples of public goods?


  Asteroid deflection and radio broadcast
• What is the fundamental problem in the media and communications industry?


  How to create rivalry and/or excludability
• What are some strategies that worked well in the media industry until recently?


  • Sell seats in enclosed spaces (e.g., movie theaters)
  • Embed content into physical support (e.g., CDs, books)
• How has technological change affected content distribution?


  Digitization has decoupled information from physical support
• What are club good strategies in the media industry?


  Services that offer subscriptions to large content libraries
• What is the significance of advances in digital technology for club goods?


  They allow for access without ownership
• What is a potential downside of technology in the media industry?


  It can lead to piracy
• Can the economics work if media is a public good?


  • Non-rival and non-excludable
  • Many strategies are not based on payment from consumers (zero-priced)
  • Examples include:
  • Advertising-based media
  • Complementary goods (e.g., popcorn in theaters)
  • Hardware-based strategies (e.g., Apple)
  • Patronage systems (e.g., Radiohead’s Rainbow, Patreon)
  • State-sponsored media/taxation (e.g., BBC, PBS)