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o Over consumption
Not generally a problem with input products such as oil
• Adequate reserve stocks will be kept and market allocations are likely to be just as good as collective public allocations
Resources that are not inputs are more susceptible to over consumption
This is another opportunity for rational public policy
• Option Demand – nonusers are willing to contribute to maintenance costs because they want the option of future use
• Existence Value – the good has inherent worth regardless of whether or not an individual is a user
Public policy can deal with specific concerns about the efficiency of capital markets and the adequacy of the market to handle certain circumstances