Providing Public Goods

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Public Goods

A Public Good is a shared good or service for which it would be inefficient or impractical to

1. make consumers pay individually

2. exclude those who did not pay

Characteristics of Public Goods

Second Feature

The second feature of public goods is excluding non-payers.

First Feature

First feature of public goods is making each consumer pay.

Private Sector

The part of the economy that involves transactions of indiciduals and businesses, would have little incentive to produce public goods.

Public Sector

The part of the economy that involves the transactions of the government. (How the money is handeled)

Free-Rider Problem

Free rider

Someone who would not be willing to pay for a certain good or service, but would get the benefit of it anyway if it were provided as a public good.

Cost and Benefits

governments step in to act in the public interest when they determine that the benefits of a policy outweigh the drawbacks, or the cost.

Subtopic

Infastructure

The basic facilities that are necessary for a society to function and grow.

Criteria 2

The total benefits to society are greater than the total cost.

Criteria 1

The benefit to each individual is less than the cost that each would have to pay if it were provided privately.