Roles of government.

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Presentation transcript:

Roles of government

1.) Providing public goods and services -Public goods cannot be easily restricted to those who don’t pay for them -Shared Consumption: consumption by one person does not reduce the amount of the good available to others -Non-Exclusion: it is difficult to exclude nonpayers from receiving the benefit of a good or service once it’s produced

ADDITIONAL EXAMPLES: ROADS, PARKS, TRAFFIC LIGHTS/SIGNALS

2.) Income redistribution -Services provided for citizens funded through tax dollars -Examples: Welfare payments, unemployment compensation, Social Security payments

3.) Private Property rights -Refers to the legal ownership of resources -Essential to transactions in a market economy -Property rights are protected by intellectual property laws such as copyrights and patents, legal documents like deeds for real estate or titles for cars, and business licenses or corporate charter recognize the legal owner of a business

4.) resolving market failures -Externalities: occur when an unrelated third party other than the consumer or producer of a good is hurt or benefits from the production or consumption of that good -Examples: pollution -- where people who do not purchase the good whose production created the pollution must nevertheless face polluted air or water -The government has a responsibility to fix negative externalities (regulations or fines on the company)