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Providing Public Good

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Amber Marin

on 30 April 2015

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Transcript of Providing Public Good

Public Goods
Market Failures
Public goods can generate benefits to many people, even including people who do not pay for said goods.These are called Positive Externalities.
Public Good
A shared good or service for inefficient or impractical to make consumers pay individually and to exclude those who did not pay.
Providing Public Good
Costs and Benefits
Free-Rider Problem
An economic side effect of a good or service that generates benefits or costs to someone other than the person deciding how much to produce or consume
Government's Goals and Drive
What do these political cartoons say about the decisions of the American government in relation to public good?
Characteristics of Public Goods
A phenomenon associated with public goods.
free rider
is someone who would not be willing to pay for a certain good or service, but would get the benefit anyway if it were provided as a public good.
Producing goods and services can also generate unintentional drawbacks. These drawbacks are called Negative Externalities.
First, the government takes action to create positive externalities.

Then,the government aims to limit negative externalities

Economists think private sectors produce more positive externalities than the government does

Economists want government to allow market-driven solutions

Lewis Hobbs

Amber Marin
Morgan Velez


Example: The state of Connecticut creates a new bridge.
The positive externality of this is that the state gains revenue due to tolls.
A situation in which the free market,operating on its own, does not distribute resources efficiently
The negative externality of this is that construction and traffic increases the noise in the area.
Most public good programs are funded through the collection of taxes
Everyone recieves the benefits of public goods even if they don't pay for them
They are owned by the public body and not private corporations
There is an unlimited amount of benefits to all consumers, no matter the number of consumers that are recieving the benefits
Public Sector
the part of the economy that involves the transactions of the government
Private Sector
the part of the economy that involves the transactions of individuals and businesses
A free market operates on the choices of individuals. These choices determine what goods are made, how that are made, and who consumes the goods....
...Services that are necessary for society to function but are not neccesarily profitable would be considered a market failure because there needs to be external intervention
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