Governments usually build highways because it is difficult to exclude individuals who don't pay for the highways from using them.What type of market failure is involved?

Question

Quizplus · Accepted Answer

The presence of public goods is the market failure involved in the government's decision to build highways. This is because highways are non-excludable, meaning that it is difficult to prevent individuals who don't pay for the highway from using it. Therefore, if the government did not provide highways, they would be underprovided, as people who benefit from the highway could not be prevented from using it without paying. This is a classic example of a public good.

Governments Usually Build Highways Because It Is Difficult to Exclude