--%>
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 : What is State Operations State

    State Operations (SO): It is a character of expenditure symbolizing expenditures for the support of state government, exclusive of capital investments and expenses for the local assistance actions.

    		•
  • Q : Role of depreciation in estimating

    What kind of role does depreciation play in estimating incremental cash flows? Depreciation expense is a tax deductible expense and therefore affects cash flow through its effect on taxes. Depreciation expense which is incremental to a proposed

    		•
  • Q : Explain accepting or rejecting of

    For a specified IOS and MCC, how do financial managers decide which proposed capital budgeting projects to accept, and which to reject? For a specified IOS and MCC, all independent projects that plot on the IOS above the MCC are accepted. Those

    		•
  • Q : How are financial trades made on a

    How are financial trades made on a planned exchange?Each of exchange listed security is traded at a particulate location on the trading floor called the post. The trading is supervised through specialists who act either as brokers (bringing toge

    		•
  • Q : Cause-and-effect chain Normal 0 false

    Normal 0 false false

    		•
  • Q : Decision rule using net present value

    Describe the decision rule for accepting or rejecting proposed projects while using net present value? While using the net present value decision rule any project along with a net present value greater than or equal to zero would be acceptable.

    		•
  • Q : Explain the basic goal of a business

    Normal 0 false false

    		•
  • Q : Question on price level Normal 0 false

    Normal 0 false false

  • Q : Define Allotment Allotment : The

    Allotment: The permitted division of an amount (generally of an appropriation) to be expended for a specific purpose throughout a particular time period. An allotment is usually authorized on line item expenditure basis by program or

    		•
  • Q : Describe benefits of the JIT inventory

    Describe the benefits of the JIT inventory control system? The just-in-time (JIT) inventory control system lowers inventory carrying costs & tends to raise quality.  

    		•