- Common Pool Resources - resources that are not owned by anyone, do not have a price and are available for anyone to us without payment or any other restriction - rivalrous and non-excludable - Public Goods - socially desirable goods not produced by private firms because it is not possible to charge a price - non-rivalrous & non-excludable - The Free Rider Problem - when people can enjoy the use of a good without paying for it - Market failure - the failure of the market to allocate resources efficiently. - Market failure results in allocative inefficiency. - Externality - An externality occurs when the actions of consumers / producers give rise to negative / positive side-effects on third parties