Question

Why are private businesses unlikely to provide Public and Merit goods that

Governments fund with money from taxes?
Those kinds of goods and services can never be profitable.
They are subject to the Free Rider Problem and can be accessed by people who
don't pay for it.
They are subject to the Free Rider Problem and are only accessible to a small
group of people.

Answer 1

Private businesses are unlikely to provide Public and Merit goods. These goods may not be profitable, and they are subject to the Free Rider Problem and may be accessible to a large number of people.

Step-by-step explanation:

Private businesses are unlikely to provide Public and Merit goods that governments fund with money from taxes for several reasons:

1. Profitability: These goods and services may not be profitable for businesses to provide. Public goods, such as national defense or street lighting, are non-excludable, meaning that it is difficult to exclude non-paying individuals from benefiting from them. This lack of exclusivity reduces the profit potential for businesses.
2. Free Rider Problem: Public goods are also subject to the Free Rider Problem, where individuals can benefit from the goods without contributing to their funding. This creates a situation where businesses would struggle to recover the costs of providing these goods, as customers can access them without paying.
3. Accessibility: While some public goods are accessible to a small group of people, others, like parks or public libraries, are accessible to a large number of individuals. Businesses would find it challenging to monetize the provision of goods that are meant to be widely available to the public.

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