Public Goods Essay

Question 1

Public goods:

Public goods are provided only by the government. If the market does not provide particular goods/services then there must be some government intervention. Public goods are ‘communal services’ that are provided to ensure there is access for the market without prejudice. This means that whether individuals pay taxes or not then they still have access to their services, this is known as ‘non excludability. The government providing their services also means that the availability of the service is not reduced due to one user’s consumption of the service.

An example of public goods provided by the government would include: street lighting and household utilities like water. Water is a good example of where it’s consumption in one household does not affect it’s availability to other households. Public goods like flood controlling system could not be left to the ‘free market mechanism’ as it would result in a gap in the market. The reason for this would be because a service like this could not be monitored by a private company in order to charge the consumer.

Merit goods:

Merit goods are provided by the government and also the privet sector. The privet sector provides their goods at a higher cost that not all of the society can afford. A merit good is a product that the public values, they also believe that everyone should be able to receive it regardless of there. In Scotland there is a free government education system and free prescriptions. The government provide these goods because they believe that if the decision was left to the ‘free market’ then individuals may not act in their best interest, in part because of imperfect information. If the government provides these goods then most people will receive t...

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...t, Africa and South America still allow cartels to adjust oil prices which have a knock on effect on all countries economies along with inflation. Cartels like OPEC still operate. Every 3 months OPEC decides how many barrels will be supplied, the more barrels supplied-the cheaper the petrol and the less barrels supplies-the dearer the petrol. At the meetings they decide whether to increase or decrease the barrels which I believe is wrong and should be stopped. If this same thing was happening in the UK it would be illegal.

Wikipedia agreeing to it being a cartel: http://en.wikipedia.org/wiki/OPEC ‘OPEC (/ˈoʊpɛk/ OH-pek) (Organization of the Petroleum Exporting Countries) is an oil cartel whose mission is to coordinate the policies of the oil-producing countries. The goal is to secure a steady income to the member states and to secure supply of oil to the consumers’