A platform for research: civil engineering, architecture and urbanism
A platform for research: civil engineering, architecture and urbanism
Governments provide public goods in the context of their allocation function because of shortcomings of private markets. Private firms supply goods to the market only if there is a chance of a profit. This requires buyers with an evident willingness to pay, and this is not given for public goods. These have two main characteristics. This chapter discusses these two characteristics in more depth. Microeconomic theory provides evidence that markets allocate goods efficiently except in cases of market power, externalities, or other forms of market failures. Public goods are defined by nonexcludability and this opens the door for free riding. Users who do not contribute to covering the cost of a public good cannot be excluded from its benefits. Given the problems of finding out the demand for a public good, most public agencies revert to cost–benefit analyses.
Governments provide public goods in the context of their allocation function because of shortcomings of private markets. Private firms supply goods to the market only if there is a chance of a profit. This requires buyers with an evident willingness to pay, and this is not given for public goods. These have two main characteristics. This chapter discusses these two characteristics in more depth. Microeconomic theory provides evidence that markets allocate goods efficiently except in cases of market power, externalities, or other forms of market failures. Public goods are defined by nonexcludability and this opens the door for free riding. Users who do not contribute to covering the cost of a public good cannot be excluded from its benefits. Given the problems of finding out the demand for a public good, most public agencies revert to cost–benefit analyses.
Public Goods
Brockmann, Christian (author)
Construction Microeconomics ; 355-365
2023-02-28
11 pages
Article/Chapter (Book)
Electronic Resource
English
Local public goods and central charities
| Online Contents | 1998
Public goods, unemployment and policy coordination
| Online Contents | 2008
Ethnic Diversity and Public Goods Provision
| Online Contents | 2016
Public goods, unemployment and policy coordination
| Online Contents | 2008