Question

Explain why the government produces goods, the private sector can and does produce, while the private sector will not produce the products ONLY the government can and will produce

Answer 1

the statement represents that the government wants to monopolize the production of such goods not because government is able to produce or private sector is inefficient of producing it, but to prevent the interest of people belonging to all income level group.

we can understand the concept with following example-

• suppose government of a country produces some vaccines and no private firm is entitled to produce such vaccinies.this vaccine prevent the infants from various diseases and anyone can get their new born child this vaccine free of cost.this means the vaccine is similar to a public good.
• now suppose if this vaccine was produced by the private firm and the firm had its patents,then the price of per vaccine would have been high and only a few people or higher income group people could get the vaccine for their children.

we can consider another example-

• suppose in a country, government is operating railway services.government is providing a train service from an urban area to a rural area,but in monetary term the railways is not earning any profit or even it is earning loss,but eventually the people belonging to rural area are getting service and furthermore they are able to continue their jobs in the urban area and thus there is a social benefit of this service.
• now suppose if the railways would have been operated by the private sectors,in this scenario the private sector would have operated only those trains which were beneficial for them and helped them to earn more and more profit.they would have ignored the interest of people and have profit motive.

from the above examples we can observe that, is some cases government's intervention becomes necessary to prevent the interest of lower level group and to maintain equality.