Market Failure in the Private Provision of Non-Rrival Goods
A fundamental economic problem arises with non-rival goods, regardless of whether exclusion is possible. While the value of such a good to consumers remains the same, private provision leads to a Pareto-inefficient outcome. Private suppliers will not provide the good at the Pareto-efficient level because they must charge a price to cover costs, thereby excluding some consumers who value the good above its zero marginal cost. Furthermore, depending on the combined costs of producing the good and implementing the exclusion technology, private firms may choose to undersupply the good or not provide it at all.
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Introduction to Microeconomics Course
The Economy 2.0 Microeconomics @ CORE Econ
Ch.10 Market successes and failures: The societal effects of private decisions - The Economy 2.0 Microeconomics @ CORE Econ
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