QuestionJune 5, 2025

2. Using the theory of public goods, explain the logic of why in some resort communities the ownership of waterfront homes also includes some defined area along the beach.

2. Using the theory of public goods, explain the logic of why in some resort communities the ownership of waterfront homes also includes some defined area along the beach.
2. Using the theory of public goods, explain the logic
of why in some resort communities the ownership
of waterfront homes also includes some defined
area along the beach.

Solution
4.0(168 votes)

Answer

Ownership of waterfront homes includes beach areas to ensure exclusivity, reduce free-riding, and incentivize maintenance. Explanation 1. Define Public Goods Public goods are non-excludable and non-rivalrous, meaning they can be used by anyone without reducing availability to others. 2. Explain Excludability in Resort Communities In resort communities, making beach areas excludable by tying them to property ownership ensures only homeowners have access, preventing overuse and maintaining quality. 3. Address Free-Rider Problem By linking beach access to homeownership, the free-rider problem is minimized as only those who contribute (homeowners) benefit from the beach maintenance. 4. Discuss Incentives for Maintenance Homeowners have a vested interest in maintaining the beach area, leading to better upkeep and preservation of the resource.

Explanation

1. Define Public Goods<br /> Public goods are non-excludable and non-rivalrous, meaning they can be used by anyone without reducing availability to others.<br /><br />2. Explain Excludability in Resort Communities<br /> In resort communities, making beach areas excludable by tying them to property ownership ensures only homeowners have access, preventing overuse and maintaining quality.<br /><br />3. Address Free-Rider Problem<br /> By linking beach access to homeownership, the free-rider problem is minimized as only those who contribute (homeowners) benefit from the beach maintenance.<br /><br />4. Discuss Incentives for Maintenance<br /> Homeowners have a vested interest in maintaining the beach area, leading to better upkeep and preservation of the resource.
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