Every nation has different types of resources. Some of these resources may be internationally traded while some other resources may only be sold and used locally. All those resource that can be sold or rather used locally are the ones that are referred to as non-traded resource. Resources are classified as non-traded due to some reasons. The first one is that they may have no international value or market meaning that no one will buy them in the international market such as firewood, or it may be very difficult to export them and therefore they must be used locally for instance the city council water. The third reason why goods may be non-traded is the fact that the government does not allow export of such resources. (Diamon, P, Hausman, J.)
It is therefore obvious that there are some issues that will arise while trying to fix the value of non-traded goods. The first issue is that most of these goods are local goods and services are locally produced and in most cases by the government or rather by parastatal. It happens that they are monopolies and therefore there is very little competition. By the fact that there is little or no competition, some of the good are poorly produced and the customers will only use them because they are in need of them and not because they are the best products. (Kolstad)
In addition, due to the nature of the good and services that are non-traded, it happens that even the consumers or the customer are not willing to buy them. This eliminates the nature of a normal market that is usually important for any good or service to be traded. This makes it even more difficult for the operators in the market to be able to know the actual value of the good or the service that they may be selling. A producer is usually able to fix the value of goods or services that he or she may be selling using the offers that are given by the consumers. If this offer is not there, it become very difficult to determine how much will be spent on this. (Diamon, P, Hausman, J.)
A value that must be fixed for these goods and services must be reasonable so that people may buy them. It becomes very difficult to fix these values because there are some other issues that are involved in the process. First, there are some complementary resources which make it difficult for the consumers to be interested in the non-traded goods. For instance, instead of using firewood, which can be termed as non-traded good, people are turning into other forms of fuel such as gas which happens to be very cheap. This makes it difficult for the producers of firewood to fix the prices of firewood as none of the customers want to buy them because the price of gas is very low. (Nunes)
However, there is a way of dealing with this problem and this is through the use of the contingent value method which is commonly abbreviated as CVM. Using this method, the producers can reduce or rather deal with these issues which makes it difficult to have or to fix the value of the non-traded goods. Through this method, the producer can go into the market and infer preferences of the individual for public goods. Individuals in the public are the one who say what they want. Using this method, the consumer usually gives the maximum value that they want to spend on a certain goods. This makes it easier to fix the price of such a good because the producer will have an idea of the value that the consumer can buy the goods. In addition,, this is known to solve most of the issue that arise from the trying to fix values of these non traded goods as the figure will only come from the consumer themselves. (Perman, R. et al)
It is therefore obvious that there are some issues that will arise while trying to fix the value of non-traded goods. The first issue is that most of these goods are local goods and services are locally produced and in most cases by the government or rather by parastatal. It happens that they are monopolies and therefore there is very little competition. By the fact that there is little or no competition, some of the good are poorly produced and the customers will only use them because they are in need of them and not because they are the best products. (Kolstad)
In addition, due to the nature of the good and services that are non-traded, it happens that even the consumers or the customer are not willing to buy them. This eliminates the nature of a normal market that is usually important for any good or service to be traded. This makes it even more difficult for the operators in the market to be able to know the actual value of the good or the service that they may be selling. A producer is usually able to fix the value of goods or services that he or she may be selling using the offers that are given by the consumers. If this offer is not there, it become very difficult to determine how much will be spent on this. (Diamon, P, Hausman, J.)
A value that must be fixed for these goods and services must be reasonable so that people may buy them. It becomes very difficult to fix these values because there are some other issues that are involved in the process. First, there are some complementary resources which make it difficult for the consumers to be interested in the non-traded goods. For instance, instead of using firewood, which can be termed as non-traded good, people are turning into other forms of fuel such as gas which happens to be very cheap. This makes it difficult for the producers of firewood to fix the prices of firewood as none of the customers want to buy them because the price of gas is very low. (Nunes)
However, there is a way of dealing with this problem and this is through the use of the contingent value method which is commonly abbreviated as CVM. Using this method, the producers can reduce or rather deal with these issues which makes it difficult to have or to fix the value of the non-traded goods. Through this method, the producer can go into the market and infer preferences of the individual for public goods. Individuals in the public are the one who say what they want. Using this method, the consumer usually gives the maximum value that they want to spend on a certain goods. This makes it easier to fix the price of such a good because the producer will have an idea of the value that the consumer can buy the goods. In addition,, this is known to solve most of the issue that arise from the trying to fix values of these non traded goods as the figure will only come from the consumer themselves. (Perman, R. et al)
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