Merit & Public Goods Essay Example | Topics and Well Written Essays - 500 words

Merit & Public Goods - Essay Example The services provided by the government to some extent are related to the public goods, the merit goods, and the private goods. However, the relationship varies most when it comes to the public and the private goods as they involve the government. The public goods mostly revolve around, justice public order and defense; the merit goods revolve around education, health, and the other services that the private sector can provide. The relationship between the private and the merit goods differs totally from the relationship between the private and the public goods; hence, finally the government and the private consumption complement each other (Savas, 2005). The public goods are often under provided by a free market, as its characteristics are usually non-excludability and non-rivalry. Non rivalry means that the consumption of goods does not reduce the amount available for the other residents in the public, For example, the people benefiting from lights in the street cannot reduce the amount of light for the others. Non-excludability is only possible when the provision of a certain good also results in the enjoyment of others, for example, the provision of law and orders. Non excludability means that one cannot prevent the ‘free riders from enjoying the good or services, in many cases the provider of the good or the service cannot charge for the consumption of the good. In non-rivalrous consumption, the issue of the free rider effect comes in (free ride problem comes in as one is unable to prevent other from enjoying the good). The private cases are more complex than public and the merit goods, even with the problem of the free rider effect private goods and services pose more problems than the public and merit goods. In most cases the private good and services need to be bought for consumption, the goal of the producer or the service in the case of private goods is to make profits. Without the incentive to create revenue than the private good