The market tends to underproduce public goods.
The market mechanism leads to underproduction of public goods because everyone would wait for someone else to pay.

Question

Quizplus · Accepted Answer

Public goods are non-excludable and non-rivalrous, meaning that once they are provided, everyone can benefit from them at no additional cost, and their consumption by one person does not diminish their availability for others. This creates a free-rider problem, where individuals may be incentivized to not contribute to the provision of public goods because they can still benefit from them without paying. As a result, the market may fail to provide an efficient level of public goods without government intervention.

The Market Tends to Underproduce Public Goods