College 1
Economic geography studies the mutual relationship between the actions of people, firms and
governments and the socio-economic context on different scales.
Two overarching questions:
- What drives the spatial decisions of firms, people and governments as the main agents?
- Why are some places more prosperous – in a broad sense – than others?
Classification of goods:
Rivalry (als 1 iemand iets No-rivalry
consumeert, kan iemand anders het
niet meer consumeren)
Excludable (kan je mensen Pure individual good (nauwelijks Quasi-collective good
uitsluiten om iets te consumeren) overheidsbemoeienis, vooral de markt, - Netflix (uitsluiting
omdat markt maakt het mogelijk om er
geld mee te verdienen) nodig, omdat je
- Cup of coffee. abonnement moet
- Smartphone. betalen).
- Book. - Nature Park with
entrance fee.
- Patents.
Non-excludable Group good Pure collective good (nauwelijks
- Fishing grounds. marktswerking, vooral de overheid, omdat
markt niet mogelijk maakt om geld mee te
- Commons verdienen)
(gemeenschappelijke - Landscapes.
gronden). - Biodiversity.
- Mineral extraction. - Army.
Education is a mixed good.
Externalities (bijproduct): an alternative classification distinguishes between ‘normal’ goods and
externalities.
- Consumption externality: use of a consumer is influenced by the behaviour of another
economic agent, whose behaviour remains outside the control of the affected consumer
(bijproduct komt door consumptie).
o Positive, e.g. beautiful garden, ...
o Negative, e.g. noisy neighbors, ...
- Production externality: profit of a producer is influenced by the behaviour of another
economic agent, whose behaviour remains outside the control of the affected producer
(bijproduct komt door productie).
o Positive, e.g. CO2 making crops grow faster, …
o Negative, e.g. bad smell from pig production negatively affecting a camping site, …
Soms is een externaliteit voor de een positief en voor de ander negatief → dus niet altijd duidelijk.
,With externalities markets do not send the correct signals, or markets are missing completely.
Besides the fact that landscapes are pure collective goods (= public goods) they are also
externalities.
Coordination mechanisms: If markets fail (this is the case for all other goods than the pure
individual goods and externalities) government intervention is required. This can be for example by
assigning property rights (to prevent the ‘tragedy of the commons’), legally protecting patents (in
case of quasi-collective goods), or contracting or in-house production (in case of public goods). The
extreme case of government intervention is “in-house production” by the government. Ownership,
decision-making, financing, management, production and operation are all in the hands of the
government. Example: military and police. However, there are different hybrid forms, such as
contracts, cooperatives, clubs, etc. Example: Natuurmonumenten maintains landscapes and gets
paid for it.
Contracts: contracts can be either:
- complete: all eventualities are spelled out (e.g. maintenance contract);
- incomplete: this is not the case (e.g. labor contract, marriage).
Incomplete contracts require a lot of social and human capital, e.g. in the form of trust. In practice
this is often lacking. This could imply that some goods are not supplied (e.g., no vaccination).
Choice of the coordination mechanism is largely determined by transaction costs: search costs
and costs of concluding, monitoring and enforcing the contract. If costs are high incomplete
contracts are favored. Transaction costs are determined by:
- Information and uncertainty: information asymmetry can take the form of Adverse selection
(before a contract is concluded, levensverzekering) and Hidden action (after a contract is
concluded). To solve information asymmetry costs must be made.
- Time inconsistency (bijvoorbeeld of dieselbusjes in een stad mogen rijden): rules of the
game are changed by policy setting party. Prevention of, and dealing with, time
inconsistency involves transaction costs.
- Transaction specific investments: these can lead to lock-in effects. Prevention involves
transaction costs.
- Bounded rationality: prevention involves transaction costs.
- Transaction frequency: if frequency is large a market is favoured. Large building projects
have a low frequency, and therefore, in-house production (full integration) or incomplete
contracts (je weet niet goed wat je kan verwachten) are often favoured.
For nature and landscapes often hybrid forms are most efficient. Three ways:
- Government subsidizes (through a simple contract) for nature production by farmers;
- Nature conservation organizations buy land for nature production or subsidize farmers’
nature production;
- The government still owns the land and takes the decisions but concludes contracts with
private parties that manage and exploit the nature areas.
,Markets can fail but also governments can fail. This means that too much or too little of something
is produced. Reasons for government failure:
- Role of interest groups (i.e. lobbying, overheden luisteren meer naar lobby-organisaties);
- Measurement problem (i.e. it is difficult to express relevant factors in money terms);
- Related to this is that there is no ‘market discipline’ (i.e. it is never enough if you do not have
to pay);
- Preferences of civil servants also play a role (i.e. self-interest of policy makers).
, College 2
Hoe kan je een prijskaartje hangen voor een publiek belang (gezondheidszorg, landschap, etc.).
Secundaire baten: goederen die je kan verkopen.
- Directe baten: komen direct uit het gebied, zoals het afschieten van herten.
- Indirecte baten: baten die ontstaan als soort ‘bijproduct’.
o Bijv. een hotel rondom een natuurgebied.
Primaire baten: zijn niet te meten in prijs. Splitsen in gebruikswaarden en niet-gebruikswaarden.
- Gebruikswaarden: genieten van de natuur nu.
o Kan opgesplitst worden in het nu genieten, of om er in de toekomst van te genieten.
- Niet-gebruikswaarden: waarden hechten aan een natuur/landschap zonder dat je er ooit
gebruik van maakt.
o Existence value: the value you attach to the existence and preservation of the
nature area (I will never visit the North Pole, but I feel it is important to preserve);
o Intrinsic value: value you attach to the well-being of non-humans (plants, insects,
animals);
o Bequest value: the value you attach to the fact that future generations can enjoy the
nature area;
o Vicarious use value: the value you attach to the fact that others can enjoy the
nature area.
Traditional valuation methods are used for goods for which there is a market (i.e. there are private
property rights). The most used methods are:
Economic geography studies the mutual relationship between the actions of people, firms and
governments and the socio-economic context on different scales.
Two overarching questions:
- What drives the spatial decisions of firms, people and governments as the main agents?
- Why are some places more prosperous – in a broad sense – than others?
Classification of goods:
Rivalry (als 1 iemand iets No-rivalry
consumeert, kan iemand anders het
niet meer consumeren)
Excludable (kan je mensen Pure individual good (nauwelijks Quasi-collective good
uitsluiten om iets te consumeren) overheidsbemoeienis, vooral de markt, - Netflix (uitsluiting
omdat markt maakt het mogelijk om er
geld mee te verdienen) nodig, omdat je
- Cup of coffee. abonnement moet
- Smartphone. betalen).
- Book. - Nature Park with
entrance fee.
- Patents.
Non-excludable Group good Pure collective good (nauwelijks
- Fishing grounds. marktswerking, vooral de overheid, omdat
markt niet mogelijk maakt om geld mee te
- Commons verdienen)
(gemeenschappelijke - Landscapes.
gronden). - Biodiversity.
- Mineral extraction. - Army.
Education is a mixed good.
Externalities (bijproduct): an alternative classification distinguishes between ‘normal’ goods and
externalities.
- Consumption externality: use of a consumer is influenced by the behaviour of another
economic agent, whose behaviour remains outside the control of the affected consumer
(bijproduct komt door consumptie).
o Positive, e.g. beautiful garden, ...
o Negative, e.g. noisy neighbors, ...
- Production externality: profit of a producer is influenced by the behaviour of another
economic agent, whose behaviour remains outside the control of the affected producer
(bijproduct komt door productie).
o Positive, e.g. CO2 making crops grow faster, …
o Negative, e.g. bad smell from pig production negatively affecting a camping site, …
Soms is een externaliteit voor de een positief en voor de ander negatief → dus niet altijd duidelijk.
,With externalities markets do not send the correct signals, or markets are missing completely.
Besides the fact that landscapes are pure collective goods (= public goods) they are also
externalities.
Coordination mechanisms: If markets fail (this is the case for all other goods than the pure
individual goods and externalities) government intervention is required. This can be for example by
assigning property rights (to prevent the ‘tragedy of the commons’), legally protecting patents (in
case of quasi-collective goods), or contracting or in-house production (in case of public goods). The
extreme case of government intervention is “in-house production” by the government. Ownership,
decision-making, financing, management, production and operation are all in the hands of the
government. Example: military and police. However, there are different hybrid forms, such as
contracts, cooperatives, clubs, etc. Example: Natuurmonumenten maintains landscapes and gets
paid for it.
Contracts: contracts can be either:
- complete: all eventualities are spelled out (e.g. maintenance contract);
- incomplete: this is not the case (e.g. labor contract, marriage).
Incomplete contracts require a lot of social and human capital, e.g. in the form of trust. In practice
this is often lacking. This could imply that some goods are not supplied (e.g., no vaccination).
Choice of the coordination mechanism is largely determined by transaction costs: search costs
and costs of concluding, monitoring and enforcing the contract. If costs are high incomplete
contracts are favored. Transaction costs are determined by:
- Information and uncertainty: information asymmetry can take the form of Adverse selection
(before a contract is concluded, levensverzekering) and Hidden action (after a contract is
concluded). To solve information asymmetry costs must be made.
- Time inconsistency (bijvoorbeeld of dieselbusjes in een stad mogen rijden): rules of the
game are changed by policy setting party. Prevention of, and dealing with, time
inconsistency involves transaction costs.
- Transaction specific investments: these can lead to lock-in effects. Prevention involves
transaction costs.
- Bounded rationality: prevention involves transaction costs.
- Transaction frequency: if frequency is large a market is favoured. Large building projects
have a low frequency, and therefore, in-house production (full integration) or incomplete
contracts (je weet niet goed wat je kan verwachten) are often favoured.
For nature and landscapes often hybrid forms are most efficient. Three ways:
- Government subsidizes (through a simple contract) for nature production by farmers;
- Nature conservation organizations buy land for nature production or subsidize farmers’
nature production;
- The government still owns the land and takes the decisions but concludes contracts with
private parties that manage and exploit the nature areas.
,Markets can fail but also governments can fail. This means that too much or too little of something
is produced. Reasons for government failure:
- Role of interest groups (i.e. lobbying, overheden luisteren meer naar lobby-organisaties);
- Measurement problem (i.e. it is difficult to express relevant factors in money terms);
- Related to this is that there is no ‘market discipline’ (i.e. it is never enough if you do not have
to pay);
- Preferences of civil servants also play a role (i.e. self-interest of policy makers).
, College 2
Hoe kan je een prijskaartje hangen voor een publiek belang (gezondheidszorg, landschap, etc.).
Secundaire baten: goederen die je kan verkopen.
- Directe baten: komen direct uit het gebied, zoals het afschieten van herten.
- Indirecte baten: baten die ontstaan als soort ‘bijproduct’.
o Bijv. een hotel rondom een natuurgebied.
Primaire baten: zijn niet te meten in prijs. Splitsen in gebruikswaarden en niet-gebruikswaarden.
- Gebruikswaarden: genieten van de natuur nu.
o Kan opgesplitst worden in het nu genieten, of om er in de toekomst van te genieten.
- Niet-gebruikswaarden: waarden hechten aan een natuur/landschap zonder dat je er ooit
gebruik van maakt.
o Existence value: the value you attach to the existence and preservation of the
nature area (I will never visit the North Pole, but I feel it is important to preserve);
o Intrinsic value: value you attach to the well-being of non-humans (plants, insects,
animals);
o Bequest value: the value you attach to the fact that future generations can enjoy the
nature area;
o Vicarious use value: the value you attach to the fact that others can enjoy the
nature area.
Traditional valuation methods are used for goods for which there is a market (i.e. there are private
property rights). The most used methods are:
