Markets tend to produce too little of an excludable public good because
A) transaction costs are high.
B) of the lack of rivalry.
C) these goods are depletable.
D) All of the above.

Question

Quizplus · Accepted Answer

Excludable public goods are those that can be restricted in access to those who pay for them. However, once one person has access to the good, it does not diminish the amount available for others. This lack of rivalry means that it is difficult for private firms to profitably produce and sell these goods. Therefore, the market tends to produce too little of them. The other options (transaction costs and depletable nature) may also be obstacles to private provision of public goods, but they are not specific to excludable public goods.

Markets Tend to Produce Too Little of an Excludable Public