11.2 Public Goods and The Free-Rider Problem
MyEconLab Concept Video
Why does the U.S. government provide our national defense and district court system? Why do the state governments provide flood-control levees? Why do our city governments provide fire and police services? Why don’t we buy our national defense from North Pole Protection, Inc., a private firm that competes for our dollars in the marketplace in the same way that McDonald’s does? Why don’t private engineering firms provide levees? Why don’t we buy our policing and fire services from Brink’s and other private firms? The answer is that all of these goods are public goods—goods that are nonexcludable and nonrival—and such goods create a free-rider problem.
The Free-Rider Problem ...
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