Public Goods Case Study

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Public goods There are two characteristics of public goods which is non-rivalry and non-excludability. Non-rivalry means that the good can be consumed by several individuals without reduce the amount available for others or diminishing its value. For example: benefiting from a street light doesn’t reduce the light for other but eating an apple would. Non-excludability occurs when it is not possible to provide a good without it being possible for others to enjoy. For example: If a company stages a fireworks show, other people can watch the show from their windows or backyards without any charges, because the company is not allow to charge a fee for consumption. Problem of public goods Free rider is the common problem for public goods. Once…show more content…
There are several causes of information failure. Firstly when the participants in an economic exchange do not have enough or sufficient knowledge. Secondly, when one participant in an economic exchange knoe more than the other. Therefore, the causes is likely to be misallocation of the resources as it may lead to the consumer paying too much or too little or the firm producing too much or too little. However, the government has a considerable role in reduce the issue of information failure by providing two strategies which is increasing the supply of information and increasing the demand for information. Factor immobility Factor immobility occurs when it is difficult for factors of production to move between different areas of the economy. Factor immobility involves the geographical immobility, which is the difficulty of moving from one geographical area to another, and occupational immobility, which is the difficulty of moving from one type of work to another. The reasons for the

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