The market tends to underproduce public goods because

Question

Quizplus · Accepted Answer

Public goods are characterized by non-excludability, meaning that once the good is provided, it is difficult to prevent people from benefiting from it, even if they do not contribute to the cost of providing it. Because of this, people can free-ride and choose not to pay for the public good, even though they still benefit from it. This leads to a market failure where the private sector underproduces public goods, as they cannot capture all the benefits that the good provides.

The Market Tends to Underproduce Public Goods Because