In markets for public goods, the invisible hand concept does not work in society's best interest.

Question

Quizplus · Accepted Answer

In markets for public goods, the invisible hand concept does not work in society's best interest because public goods are non-excludable and non-rival, meaning that they cannot be easily withheld from those who do not pay for them and that one person's consumption of the good does not diminish the ability of others to consume it. As a result, individuals have little incentive to pay for public goods voluntarily, and the market may fail to provide an efficient amount of these goods. In such cases, government intervention or other collective action may be necessary to ensure that society's needs are met.

In Markets for Public Goods, the Invisible Hand Concept Does