question archive Explain why private provision of a public good may result in positive provision of the public good but less than the efficient amount
Subject:MarketingPrice:2.88 Bought18
Explain why private provision of a public good may result in positive provision of the public good but less than the efficient amount.
Private provision of public goods refers to a situation where private firms supply public goods to consumers in the market. Private provision is competent while providing public goods since it surmounts the free-rider problem for the people with significant demand for public goods. However, when the individuals in the market realize that public goods are privately provided, they change their economic behavior by decreasing their disposable income on the product leaving the burden to others. The shifting of consumption patterns will imply that fewer people will consume the product, indicating that the product will be lesser than the efficient amount.