In 1-2 sentences, explain why the private businesses will not provide public goods.

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Business

Osvaldo Williams

7 March, 18:03

In 1-2 sentences, explain why the private businesses will not provide public goods.

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Lorelei Perkins · Answer 1

Ublic goods are goods which are non-excludable (no one can be denied from using it) and non-rival (use by one wouldn't affect the consumption by another).

Because of this, people want to use the good but not pay for it as they know, once the good is provided, they can't be excluded from using it. This is called Free riding.

Private companies will not be able to tackle the problem of free riding as they won't know what rate to charge and how to make everyone pay.

Govt. can, however do this easily.