The effect of Free (all included prices)

Free power in rented accomodation
http://www.nytimes.com/2010/08/16/nyregion/16chill.html?_r=1&hp=&pagewanted=all

Free parking
http://www.nytimes.com/2010/08/15/business/economy/15view.html?scp=1&sq=economic%20view&st=cse

All you can eat offers
http://www.youtube.com/watch?v=BDPk6OQkpeI
http://news.bbc.co.uk/1/hi/8320043.stm

What is the economics of these deals?

Market Failure

Market Failure I
- Positive externalities
- Negative externalities

http://beta.economicspro.eu/vid.php?user=EconomicsPro&video_id=25

Market Failure II
- Public goods
- Under provision of merit and over provision of demerit goods
- Abuse of monopoly power
- Government response to market failure

http://beta.economicspro.eu/vid.php?user=EconomicsPro&video_id=26

Market Failure - a longer video; get your notebook ready!

This is good because it gives an overview of the topic and also gives alternative solutions to market failure.

Watch and carefully note:

• pollution permits
• property rights
• positive externalities - it may be a little early for this for U1, but it is certianly topical!
• the welfare could be subsidised
• merit goods
• de-merit goods

Demerit good: Gaming from Parorama

The joy of wasting time - CODDERS of the world, watch this!