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Re: RoguePlanet post# 6229

Wednesday, 05/07/2003 5:26:52 PM

Wednesday, May 07, 2003 5:26:52 PM

Post# of 6491
If in fact you avail yourself of services or goods without paying for them, you ARE "withholding revenue from the creator," and you are causing harm.

This is not true. Take the concept of "public goods" in economics. Public goods are characterized by two properties: —"nonexcludability" and "nonrivalrous consumption". Here is a definition of the public goods problem and these two properties:

http://www.econlib.org/library/Enc/PublicGoodsandExternalities.html

From the article:

Nonexcludability means that nonpayers cannot be excluded from the benefits of the good or service. If an entrepreneur stages a fireworks show, for example, people can watch the show from their windows or backyards. Because the entrepreneur cannot charge a fee for consumption, the fireworks show may go unproduced, even if demand for the show is strong.

The fireworks example illustrates the "free-rider" problem. Even if the fireworks show is worth ten dollars to each person, no one will pay ten dollars to the entrepreneur. Each person will seek to "free-ride" by allowing others to pay for the show, and then watch for free from his or her backyard. If the free-rider problem cannot be solved, valuable goods and services, ones that people want and otherwise would be willing to pay for, will remain unproduced.

The second aspect of public goods is what economists call nonrivalrous consumption. Assume the entrepreneur manages to exclude noncontributors from watching the show (perhaps one can see the show only from a private field). A price will be charged for entrance to the field, and people who are unwilling to pay this price will be excluded. If the field is large enough, however, exclusion is inefficient because even nonpayers could watch the show without increasing the show's cost or diminishing anyone else's enjoyment. That is nonrivalrous competition to watch the show.


Now, in economics, a classic example of a public good, or "positive externality," is a case involving a homeowner who has a pleasant-looking and pleasant-smelling garden in his front lawn. His neighbors enjoy this sight and smell - they benefit from his front lawn,. However, if he does not charge them for this benefit, he may not spruce and garden his lawn as often as they would like.

However, the point that is relevant here is that his neighbors benefit from this good without paying for it; they are "withholding revenue from the creator", yet few of us would consider them to be causing him harm by not paying him.

Again, if I benefit from watching a movie without paying for it, I am only withholding revenue from the creator if I otherwise would have paid for it. If I would not have paid for it, I have imposed no opportunity cost.

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