When city beautification programs are funded privately, which of the following is likely to result?
A) The private costs exceed the marginal benefits of the beautification programs.
B) Only contributing citizens are likely to benefit from a more beautiful city.
C) Both free riders and contributing citizens are likely to benefit from a more beautiful city.
D) An overallocation of resources toward the beautification project is likely to occur relative to what is socially efficient.

Question

Quizplus · Accepted Answer

When city beautification programs are funded privately, both free riders and contributing citizens are likely to benefit from a more beautiful city. Free riders benefit without paying, while contributing citizens benefit and pay for the program. This is because there is no mechanism to exclude non-contributors from enjoying the benefits of the program. Hence, private funding will lead to positive externalities as both contributing citizens and free riders can enjoy the benefits of the program.

When City Beautification Programs Are Funded Privately, Which of the Following