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Managerial Economics and Property Rights

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1. What role do property rights play in creating common property resources? Why are common property resources subject to market failure due to nonexcludability?

2. What two properties characterize public goods?

3. To avoid market failure, what price must be charged for public goods? Why?

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https://brainmass.com/economics/public-economics/528920

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1. Property rights determine how a resource is used, and who owns it. Property rights means the right to use, the right to earn income from the good, the right to transfer, and the right to enforce property rights. In creating common property resources it is important that the resource is owned by the government or by collective bodies. Common pool resource is a type of good consisting of natural or human made resource system whose size /qualities make it expensive, but not impossible to exclude potential beneficiaries from getting benefits from its use. These resources are owned and ...

Solution Summary

Special characteristics of property rights are explained in a structured manner in this response. The answer includes references used.

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Discussion:
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• Describe the types of information that market prices provide.

Part 2:
• What are the incentives of government bureaucrats who run public services such as the water services, the parking services, and the airports? Do these incentives differ from those of private companies in running these services? Why or why not?
• Why would the general public want the government to provide water rather than a private for-profit company?
• How does the government protect property ownership rights?

Discussion:
• Can trade and exchange occur within the firm without the existence of private property rights? If individual property rights are necessary for economic success, how might the firm allow property rights?
• What are the "boundaries" of a firm? What determines the extent of vertical boundaries? What determines the extent of horizontal integration? Use a cost-benefit analysis to describe the optimal boundaries of a firm.
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