Question

What are the options available to government when deciding whether to rely on the private sector or the public sector to provide public goods? Use the example of prisons to illustrate.

Answer 1

The particular question dwelves into market failure and public economics.

Public goods provide an example of market failure which results from missing markets.

The main options of a public goods are that would help the government decide whether to rely on private/public sector?

1. They are non excludable meaning that the benefits of a public good are derived by all and everyone and nobody can be excluded from using it like the roadways. Even the non taxpayers enjoy the benefits of a public good and this is called a free riding problem.
2. The second point is it hs non rival consumption i.e if A is using that good, he cannot stop B from not using.
3. The third feature is that it is non rejectable meaning projects issued by the government cannot be rejected by the people, like the health care programmes.

The governement can go ino public private partnerships so as to better the infrastructures and provide positive externalities. Prisons lead to deprivation of ones liberty and puts limits and restrictions on an indivudal and is sanctioned by the government and supported by the community. A lot of prisons which are public goods are managed by private sector, and society maintains the resources and help in monitoring, integrating its operations through checks. Private prisons are possible but as a public good, government should be responsible enough to delegate its functioning and be clear about its operations.