Question

Determine whether each of the following policy interventions is designed to increase supply or decrease demand for a public good or common resource. a. A city government increases the frequency of street sweeping. b. London begins charging a toll to all vehicles that drive within the city limits. c. A gated community passes a bylaw requiring all homeowners to mow their lawns once a week during the summer. d. The National Park Service increases the cost of a pass to enter the Everglades.

Short answer

a) Increase supply, b) Decrease demand, c) No effect on supply/demand, d) Decrease demand.

Step-by-step solution

Analyzing Policy Intervention (a)

Consider what effect the policy intervention where a city government increases the frequency of street sweeping will have. The goal of increasing street sweeping is to improve the cleanliness of streets, a public good, which enhances access and benefit to the public. By offering more street sweeping services, the supply of this public good is increased.

Analyzing Policy Intervention (b)

Determine the effect of imposing a toll for vehicles driving within London city limits. By charging a toll, the incentive for vehicles to enter the area decreases, leading to a reduced demand for access to the city’s roads and facilities, which are common resources.

Analyzing Policy Intervention (c)

Examine the impact of the bylaw requiring homeowners to mow their lawns weekly. This policy does not directly affect public goods or common resources shared by the community; instead, it focuses on individual property maintenance, likely aiming to enhance the overall appearance of the community, rather than affecting supply or demand broadly.

Analyzing Policy Intervention (d)

Consider what impact increasing the cost of a National Park Service pass has. By raising prices for passes, the demand for entering the Everglades can be expected to decrease, as higher costs typically deter some visitors, reducing the demand for access to this common resource.

Key concepts

Policy Intervention

Policy interventions are actions taken by governments or organizations to influence or regulate economic and social behavior for the greater public good.
These interventions can be designed to manage common resources, enhance public goods, or control the demand for services.

• Increased street sweeping in a city aims to enhance public good by improving cleanliness and accessibility, thereby increasing the supply of this service.
• Charging a toll on vehicles in London targets reducing demand on roads to alleviate congestion and manage traffic.
• Increasing entrance fees to the Everglades through the National Park Service is intended to manage visitor numbers, controlling the demand for this natural resource.

Policy interventions often aim to ensure that resources are used efficiently and equitably across society.

Common Resources

Common resources are resources that are accessible to everyone but susceptible to overuse and depletion.
They are non-excludable, meaning anyone can use them, but they are rivalrous, as one person's use reduces the amount available for others.

• City roads in London serve as common resources, and introducing a toll aims to regulate their usage by reducing excess demand.
• The Everglades, as a national park, is another common resource where increased entry fees are used to limit overuse.

Managing these resources involves finding a balance between access and sustainability to ensure their longevity for future generations.

Demand and Supply Analysis

Demand and supply analysis is essential in understanding how different factors affect the availability and consumption of goods and services.
In the context of public goods and common resources, demand and supply analysis helps us understand policy outcomes.

• Increasing street sweeping increases the supply of this service, potentially improving living conditions and benefiting the community.
• Implementing tolls in London is a strategy to reduce demand by increasing the cost of using the roads, aimed at decreasing traffic.
• Higher park entry fees raise the cost and, as a result, reduce the demand for visiting the Everglades, potentially preserving this common resource for longer.

The goal is often to achieve a balance where resources are optimally used without causing depletion or inefficiency.