Private provision of public goods fails to achieve economic efficiency because

Name: Private provision of public goods fails to achieve economic efficiency because
Brand: Quizplus
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Question

Quizplus · Accepted Answer

The free rider problem prevents sufficient revenue collection because individuals can benefit from the good without paying for it, and the price of a privately supplied public good must be greater than zero for the provider to cover costs, which leads to inefficiency in allocation since an efficient price for a public good is zero.

Private Provision of Public Goods Fails to Achieve Economic Efficiency