In a market economy,what is the role of the government with regards to public goods?

Question

Quizplus · Accepted Answer

In a market economy, the production of public goods is not profitable for firms, as they cannot exclude non-payers from consuming them. Hence, the government has to facilitate the collective decision making in the production of public goods. The government may finance the production of public goods through taxes, subsidies or contracts with private firms. However, the government should not force the firms to produce all the public goods or take over the production of all goods in the market, as it would hinder the market efficiency and innovation. Similarly, holding a referendum before any public good is produced may cause delay and inefficiency in decision making.

In a Market Economy,what Is the Role of the Government