Markets tend to underproduce public goods, even though they are highly valued goods.

Question

Quizplus · Accepted Answer

Markets tend to focus on producing goods that have a direct and immediate benefit to consumers and are profitable to produce. Public goods, on the other hand, have benefits that are shared by all members of society, making it difficult for individuals or private firms to capture the full value of their production. This leads to underproduction of public goods in the absence of government intervention or other mechanisms to address the market failure.

Markets Tend to Underproduce Public Goods, Even Though They Are