Question

In: Economics

Why does the government support public education when the private sector also provides this service? Are...

Why does the government support public education when the private sector also provides this service? Are these reasons the same as those for government providing services such as police protection and the National Weather Service?

Solutions

Expert Solution

Ideally, goods and services would be provided in a free market without requiring any government intervention. Market provision is considered superior because there is less bureaucracy and more incentives for firms to be efficient. However, there are some goods and services which will be under-provided in a free market. Some goods may not be provided at all. This is considered a type of market failure and therefore for several reasons people argue the government should step in and provide it.

Education is considered a merit good that leads to external benefits for others and thus has a positive externalities attached with it. The private sector may underprovide such services due to its profit maximisation motice and hence the government needs to intervene. Similarly police protection and national weather service is also public good that haave the characteristic of being non rival and non exclusive. There will be probability of free riders and thus the private sector will not be able to cover its cost of provisions. This will lead to under supply of these essential services and hence fhe governmmet needs to provide it.


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