--%>
Assignment Help - homework help

Free-rider problem

Explain the two characteristics of public goods? Describe the significance of each for public provision as opposed to private provision. Depict the free-rider problem as it associate to public goods?  Is the Canadian border patrol a public good or a private good?  Why?  How regarding satellite TV?  Describe.

E

Expert

Verified

Public goods are non-rival (one person’s consumption does not avoid consumption by another) and non-excludable (once the goods are generated nobody including free riders can be excluded through the goods’ benefits).  If goods are non-rival, there is less incentive for private firms to generate them – those purchasing the good could just let others the employ without compensation. Similarly, if goods are non-excludable, private firms are unlikely to produce them as the potential for profit is low. The free-rider problem occurs while people benefit from the public good without contributing to the cost (tax revenue proportionate to the benefit attained). The Canadian border patrol is a public good – my use and benefit does not prevent yours. Satellite TV is a private good – if the dish, receiver, and service go to my residence it can’t go to my neighbours. The fact that I could invite my neighbour over to watch does not alter its status from being a private good.

   Related Questions in Finance Basics

  • Q : Define Performance Budget Performance

    Performance Budget: A budget in which proposed expenditures are prepared and tracked mainly by measurable performance objectives for actions or work programs. The performance budget might also incorporate other bases of expenditure categorization, lik

    		•
  • Q : Describe compensating balances its need

    Describe compensating balances and why do banks needs them from some customers? Under what situation would banks be most likely to impose compensating balances? Compensating balances are funds that a bank needs a customer to maintain in a non-i

    		•
  • Q : Question related to MPC Normal 0 false

    Normal 0 false false

  • Q : Describe why measure projects risk as

    Describe why we measure a project's risk as the change in the CV.We measure a project's risk since the change in the coefficient of variation since this focuses on the change in the riskiness of the firm's existing portfolio.

    		•
  • Q : State Section 1.80 Section 1.80 : The

    Section 1.80: The section of Budget Act which comprises the periods of accessibility for Budget Act appropriations.

    		•
  • Q : Explain non diversifiable risk and how

    Explain non diversifiable risk? How is it measured? Unless the returns of one-half the assets into a portfolio are entirely negatively correlated along with the other half-that is extremely unlikely-some risk will

    		•
  • Q : Describe accumulated depreciation

    Describe accumulated depreciation?Depreciation is the allocation of an asset's primary cost over time. Accumulated depreciation is the sum of all the depreciation cost that has been identified to date.

    		•
  • Q : Firm risk of any capital budgeting

    Describe how to measure the firm risk of any capital budgeting project. The firm risk of a capital budgeting project measures the effect of adding a new project to the present projects of the firm.

    		•
  • Q : What is Availability Period

    Availability Period: The time period throughout which an appropriation might be encumbered (that is, committed for expenditure), generally specified by the law making the appropriation. When no particular time is given in financial legislation, the pe

    		•
  • Q : Explain Budget—Program or Traditional

    Budget—Program or Traditional: A program budget states the operating plan in terms of the costs of activities (that is, programs) to be undertaken to attain particular goals and objectives. A traditional (or object of expenses) budget expresses

    		•