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The economic functions of the public sector are: 1) Legal framework (property rights and enforcement of...

The economic functions of the public sector are: 1) Legal framework (property rights and enforcement of contracts), 2) Correct for market failure (no, the market won't do it...that's why it's called market failure), 3) provide common and public goods

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The economic functions of the public sector are:

1) Legal framework (property rights and enforcement of contracts), Government provides the legal framework and the services needed for a market economy to operate effectively. The legal framework sets the legal status of business enterprises, ensures the rights of private ownership, and allows the making and enforcement of contracts.

2) Correct for market failure (no, the market won't do it...that's why it's called market failure), there is market failure due to the externalities like pollution, which can be corrected only with the help of the government.

3) provide common and public goods, these goods are for everyone and hence must be provided on a large scale, so an individual can't provide. So it is mostly the public sector of the economy which identifies the types and quantity of public goods required and hence provide the same for the betterment of its citizens.

So, all the three points given above are the important economic functions of the public sector in an economy.

Rahul Sunny answered 8 months ago
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