Assignment Instructions/ Description
I consider the biggest market failure to be in public goods. For example, national defense and public health. It is because a consumption by one does not impose an opportunity cost on others and nonpayers cannot be excluded from consumption. Furthermore, nonrival consumption means that public goods are efficiently owed if provided at a zero price, something markets are rarely motivated to do. According to www.huffingtonpost.com “If markets do attempt the voluntary exchange of public goods, which results in a nonzero market price, then efficiency is not achieved.”
The government should address this type of market failure through direct provision. Using this type of method, the government can supervise the production of public goods and their supply to the public. For example, the government can hire someone to oversee military operations when it comes to national defense. As far as for public health, the government can also address this failure by directly providing goods failing from market control. Huffington Post. (2017). Retrieved from https://www.huffingtonpost.com/stan-sorscher/the-4-or-5-worst-market-f_b_3807114.html
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