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 market failure is involved in this situation. Highways are non-excludable, meaning that it is difficult to exclude individuals from using them regardless of whether or not they pay for it. This results in a free-rider problem where individuals have an incentive to use the highway without paying for it. Therefore, governments usually intervene and provide highways as a public good to ensure that everyone has access to it.

Governments Usually Build Highways Because It Is Difficult to Exclude