ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -In economics, a public good refers to a commodity or service that is made available to all members of a society. Typically, these services are administered by governments and paid for collectively through taxation.

Detailed explanation-2: -Individuals cannot be charged for their use. Because of the nature of public goods, the supplier cannot prevent individuals from using them. Once supplied, all people can use a public good whether or not they contributed to its provision. This is known as the “free rider problem.”

Detailed explanation-3: -The government plays a significant role in providing goods such as national defence, infrastructure, education, security, and fire and environmental protection almost everywhere. These goods are often referred to as “public goods”.

Detailed explanation-4: -Public goods theory purports to show why goods with the rigorously defined characteristics of publicness cannot be produced efficiently by the private sector of the economy, creating a market failure which implies a role for government in the production of those goods for which the market fails.

Detailed explanation-5: -Why does the government usually supply public goods instead of private companies? For starters, the free rider problem. Free riders are the consumers who don’t pay in order to consume the public good. Since public goods are free, most consumers become free riders because they have no incentive to pay the supplier.