Left to their own,private markets tend to:

Question

Quizplus · Accepted Answer

Private markets tend to under-allocate resources to public goods because public goods are non-excludable and non-rivalrous in consumption. This means that individuals cannot be excluded from using the public good, and one person's use of the public good does not diminish its availability to others. As a result, private firms have little incentive to produce public goods because they cannot capture the full value of their production in the form of profits. As a result, government intervention is often necessary to provide public goods.

Left to Their Own,private Markets Tend To