Private ﬁrms can hardly produce a public good proﬁtably because of

Question

Quizplus · Accepted Answer

The free-rider problem is the main issue that private firms face when producing a public good. Public goods are non-excludable, meaning that once they are produced, it is impossible to exclude non-paying individuals from benefiting. This creates a situation where individuals have an incentive to free-ride, or enjoy the good without contributing to its production. As a result, private firms are unlikely to produce public goods profitably because they cannot charge consumers for the full value of the good produced.

Private ﬁRms Can Hardly Produce a Public Good Proﬁtably Because