Public goods cause market failure due to the problem of missing markets - the main characteristics of public goods are:
- Non excludability
- Non rival consumption
- Non rejectable
Quasi public goods are between a public good and a private good
- Semi non rival
- Semi non excludable
The free rider problem: because public goods are non excludable it is difficult to charge people, it leads to under provision of a good which equals market failure
Comments
No comments have yet been made