1.1 Economics of the public sector In this course, we will study a number of issues regarding the roles and functioning of a particular sector of the economy, the public sector. All national economies have a public sector, and in virtually all cases (this is certainly true for all developed economies like that of Canada) it is large and varied.
A public good is one for which rationing by means of the price system (that is, allocation across individuals via markets) is infeasible, undesirable or both.
Note that shile we typically focus on competitive markets as a benchmark, perfect competition is not necessary for this definition, as even monopolies can have difficulty supplying public goods profitably.
I. Provision and allocation via markets is infeasible.
Public goods may be non-exclusive in consumption. Once they are produced, it is very difficult to prevent households and/or firms from enjoying their benefits. That is, it is very difficult to make prospective users of the good pay to do so. Examples of goods and services with this characteristic are:
• law enforcement and defense
• the traffic control system
• the public health system
II. Provision and allocation via markets is undesirable.
Public goods may be non-rival in consumption. Once produced, many or even all households and firms may be able to enjoy their benefits simultaneously. In many cases this is indicative of large fixed costs and very small marginal costs of provision. Some examples of goods and services with this characteristic a
FREEPASS代写，专业代写，市场学paper代写/case study代写/经济学代写/管理学代写/商科代写/美国代写案例-Market Failure II: Public Goods。