Question

1.can only government supply a public good?

2. what is a public good

3. How is a Public Good Different than a Private Good

4. What are the Challenges related to public good? How should the “ Free Rider” problems should be addressed.

Answer 1

Theory:Public goods are non rivalrous and non excludable in nature. for example- Defence.

1.can only government supply a public good?

It is not necessary that only govt. provides public good, private companies can also provide it. eg. toll roads for a certain charge or street lights can be provided by companies.

2. what is a public good:

As explained above, Public goods are non rivalrous and non excludable in nature. for example- Defence.

3. How is a Public Good Different than a Private Good

Private goods are excludable and rivalrous. for example- I book a movie show today, only I will be allowed (excludable). once I book it, same seat for same show can not be booked by anyone else(rivalrous) but public goods can be consumed by many at a time and payment is not compulsory. eg. a street show.

4. What are the Challenges related to public good? How should the “ Free Rider” problems should be addressed.

Public goods are not valued as they come as free in a way. example- Fishermen may not realise a value of a common lake and overfishing may happen. This is a free rider problem.

Addressing a free rider problem:

1. Assigning a quota to every person

2. Issuing licence to exploiters with a certain payment

3. making laws for a ban in certain season on hunting/fishing.

4. carbon tax imposition if exploitation is leading to pollution.

5. Govt. may also fund for clan technology so that exploitation will create any negative externality.