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6 Cards in this Set
- Front
- Back
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What are the main characteristics of public goods? |
-Non excludability - benefits derived from pure public goods cannot be confined solely to those who paid for it. Non payers can enjoy the benefits of consumption at no financial cost to themselves - they are free riders -Non rival consumption - consumption by one person doesn't effect the consumption by another person. The marginal (additional) cost of supplying a public good to an extra person is zero. -Non rejectable - the collective supply of a pure public good for all means that it cannot be rejected by people, e.g flood defences, armed forces |
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Give examples of public goods |
Crime control/police Flood defences Infrastructure Vaccinations Public service broadcasting (BBC) HEALTH CARE IS NOT A PURE PUBLIC GOOD, THERES EXCLUDABILITY AND COMPETITION ETC |
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Explain what is a quasi public good? |
It is similar to a public good, it has some of a public goods characteristics.
Quasi public goods are: Semi non rival - up to a point, the amount of users using the service does not reduce the availability for others. But eventually it may become too used/ overcrowded. Examples include open network wi-fi, parks/leisure facilities Semi non excludable: it is possible but difficult or costly to exclude non paying customers. E.g fencing a park or beach and charging an entrance fee, or building toll booths. |
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What is the free rider problem? |
Because public goods are non excludable it is difficult to charge people for benefitting once a produce Is available The free rider problem leader to under provision of a good and thus market failure. |
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Why are pure public goods not supplied by the private sector? |
Non excludability means they'd struggle to make a profit
Free rider problem |
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Why should the state provide public goods? |
The non rival nature of consumption provides a string case for the government to provide and pay for public goods. Many public goods are provided free at the point of use and funded by taxation. State provision may helot to prevent under provision and under consumption of public goods so that social welfare is improved. The government should be able to provide public goods more efficiently because economies of scale. Providing essential public goods helps affordability and access to important services for lower income households and thus helps to address inequalities of income. |
