Topic 13 - Public Goods And Asymmetric Information - Brief

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Public Goods

Public goods are non excludable and non rival (availability is not reduced by other using the good or service). They must be provided by the government as private companies cannot charge (non excludable) - free riding problem

  • Examples - National Defence, Street Signs, Fireworks

Public goods can be classified as pure or Quasi (elements of non rivalry & non excludability)

Asymmetric Information

When people on different sides of an economic exchange are not equally well informed about an aspect of the transaction. This will usually lead to inefficient outcomes.

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