Public Goods

Public goods are those that can be consumed by more than one consumer. They have two distinct characteristics, one of them is non-rivalry. This means that many people can consume the available goods without diminishing or reducing its value. An example is the benefit from street lights by an individual does not in any way reduce the quantity of light for other users in a given locality. The other characteristic is non-excludability, which means that an individual cannot in any way be prevented from consuming the available goods (Sowell, 2014). In other words, it is impossible to provide a good without it benefiting other people in the neighborhood. An example is erection of a dam with the aim of preventing possible floods in a given region.

What is the biggest “problem” with allocating public goods?

The biggest challenge that affects allocation of public goods is the free rider mentality. Since it is not possible to prevent anyone from consuming the available public goods, individuals may tend to consume the goods without working for it. This might lead to market failures because if many consumers decide to take advantage of the free ride issue, the private costs will definitely exceed the private benefits. This means that the incentives needed to provide the goods or services will also diminish or reduce (Sowell, 2014). Therefore the market will eventually fail to produce the required goods or services. The government requires having a role in the apportionment of public goods because of the elements of non-excludability and non-rivalry. It cannot be done by the private sector because it will promote an aspect of rivalry.

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