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23 December, 12:10

Why must public goods be provided by the government instead of the free market

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  1. 23 December, 12:13
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    Public goods are goods which features the unique properties of being non-rivalry and non-excitability at the same time. Non-rivalry refers to the fact that these goods are not depleted by their ‘consumption’. In other words, when a user makes use of the good, it does not deprive another user of using it. Non-excitability refers to the fact that it is impossible or too costly to exclude non-paying users from using the goods. Streetlights exemplify these two properties of public goods; once it is provided, any additional users using it doesn’t diminish its value to existing users and at the same time, it’s hard to exclude non-paying people from using it tourist who don’t contribute to the taxes that might be spent on building the street lights can use them all the same. As a result, the goods suffer from free-ridership
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