Providing Public Goods Chapter 3 Section 3

Public good –shared good or service for which it would be impractical to or inefficient to make consumers pay Satellites, fire department, roads How to exclude non taxpayers Increased uses does not cost any more

Costs Total benefits to society must be greater than the total cost Benefit to each individual is less than the cost that each would have to pay if it were privately provided Free Rider – doesn’t want to pay but would still benefit Military, fire department Free Ride – Edgar Winter Group

Externalities Economic side effect Benefits to those not involved Neighborhood home Costs to those not involved Chemicals in water CMU students

Government Encourages positive externalities Education – workers are more productive Attempts to limit negative externalities Acid Rain