Vous êtes sur la page 1sur 1

Discuss whether the government should provide all public goods.

Public goods are goods that are necessary for the society but arent provided
if supply is left over to market forces. They bring more social benefits rather than
social costs. Characteristics of public good are non-excludability in consumption
and non-rivalry in consumption. Non-excludability in consumption means its
impossible to exclude people who dont pay for the good or service from
consuming it. Non-rivalry means if a person consumes the good or service, it
doesnt reduce the quality and quantity of the good or service for other
consumers. Examples of public goods are national defense and streetlight.
Government should produce all public goods because it is actually their
responsibility to do so. Government is not seeking for profit maximization, unlike
market forces. Since its non-excludable and non-rivalry, market forces cant
charge consumers hence they wont get profit from it, which is why market forces
dont want to produce this type of good. If its left to market forces, there might
be imperfect competition and imperfect information that leads to market failure
and consumers will suffer from having to pay high prices for this type of goods.
Imperfect competition occurs when firms reduce output to raise the price of the
good, meaning theres no allocative efficiency. A producer may practice monopoly
because they produce goods that have no close substitutes and may raise the
price of the good by reducing its output. They might not tell consumers the
benefits of the good as well which will lead to under consumption of the good.
However, government shouldnt produce all public goods because they will
face the free-rider problem. A free rider is someone who enjoys the benefits of
the goods or services without having to pay for it. An example of a free rider is the
unemployed people; they dont pay tax but they get the benefits of public goods.
It occurs because its impossible to exclude non-payers from consuming it so no
one has the incentive to pay for it. They can actually reduce this problem by
cooperating with private firms, asking them to provide more job vacancies so that
the unemployed can get jobs and pay the tax. Also, the government has very
limited funds compared to the private firms. Other than public goods, they must
provide goods or services like merit goods with limited funds.
From my explanation above, I think the government should provide all public
goods even though they will face the free rider problem; they can actually reduce
this problem by cooperating with private firms, asking them to open more job
vacancies for the unemployed so they can get income and pay taxes.

Vous aimerez peut-être aussi