Because of the free rider problem

Question

Quizplus · Accepted Answer

The free rider problem occurs when individuals benefit from a public good without contributing to its production. This leads to market failure as the socially optimal level is not reached. Since private solutions may not be feasible, governmental solutions such as regulation, taxation, or subsidies are often needed to internalize the externality and achieve a socially optimal outcome. Thus, choice C is the best option as it correctly identifies the need for governmental solutions to address externality problems.

Because of the Free Rider Problem