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Market failure:private and public goods

Economics

what is external cost for public goods.why there is more external cost for public goods and less for private goods:as economics mam explained that private cost and social cost for private goods is almost same.

sai 123

CA Inter

★ 440

02-Oct-20 18:31

337

Answers (1)

There is an externality, if the consumption or production activity has an indirect effect on other's consumption or production activities. As in the example of street lights, the public benefiting from it do not pay for it. Hence provide huge externalities. In private goods, the people pay to enjoy the benefits. Hence, less externalities.