Major Issues in Public Goods - Essay Example

Public goods An Impure public good refers to a kind of good that is partially rivalrous and whose consumption reducesthe utility level of another person but does not undermine the benefits that the other people will receive as a result of consuming the same good. Impure public goods refer to goods such as recreational facilities like parks and children public playgrounds. Impure public goods are always excludable meaning that their accessibility is somewhat controlled by the relevant authorities which has however been controversial because it compromises the ethical setting the public good is meant for (Arriagada & Perrings 803). Public good in general takes the form that it can be consumed by every individual in a functioning society. Economics further defines the good to be non-rivalrous and non-excludable but impure public goods are characterized by partiality of the non-rivalrous and non-excludable properties as opposed to pure public goods that marry the fullness of the entire two properties. Types of externalities An externality associated with impure public goods arises when the general utility of a certain good or production probability of an agent is linked on the non-monetary or non-pecuniary actions of another agent. It is a cost or benefit not catered for by the prices of related goods and the parties involved in the production or consumption of the good. This translates into positive externality and negative externality that captures the benefit aspect and negative aspect respectively (Arriagada & Perring 806). Thus the types of externalities associated with impure public goods are positive externalities and negative externalities. Positive externalities Positive externalities has beneficial value in terms of the merit good meaning the overall effect of the public good results to a chain of positive outcomes especially in a market and the economy at large. A good example is that of inventions when made available to the public other will benefit by borrowing a leaf from the knowledge spillover of the invention information although law protects inventors in such a case by issuing of patent to enable the inventor earns royalties from the shared information. Another example would be an organization tasked with the mandate to prevent and control a highly infectious disease would have played a big role in society to prevent the greater part of the population from getting sick as a result of the infectious strain. Positive externality seems to be employing a control factor to management of public goods that are social in nature and affects the society or community ion appositive way. The most common control measure of positive externality in reference to public good is taxation. Negative externalities Negative externality also known as external cost on the hand is the action of a good on the intended consumers that results to negative side effects on ‘innocent’ third party. Negative externalities mostly affect the environmental landscape. The social cost is normally associated with issues to do with pollution of the environmental factors such as air, water, land just to mention a few (Arriagada & Perrings 808). Water pollution is the most common issue faced by societies because most factories and industries dump their waste into rivers, lakes and the oceans interfering with the consumption of water for human consumption and interfering with the economic associated with the water body being polluted. Fish harvesting by companies along the coast or lakes prove disastrous when one fishing company overfishes rendering the other companies out of business which might cause a common tragedy to both the fish species and the companies involved. Negative externalities is the best example of externality type affecting impure public goods because air pollution causes a lower utility to the third party while it provides maximum benefit to the manufacturer who is able to freely discharge aerosol pollutants in the air. Public good supply Public sector or government provision of public goods is the basic provider of public goods to the general public because of the political nature embedded in its administrative structure. Government provision and supply of public goods is relatively fair because it legislates laws that cater for public provisions and breaks any barrier to the process and ensure the markets operate efficiently through offering economic incentives and fiscal policies. Public sector simply seals loop holes that the private sector cannot seal. On the other hand private sector is the best medium to control the supply of public goods because of the well-defined organizational structure that eliminates the “free rider problem” in a given society. The private sector is employed by the government to harmonize the supply of the public good to the general public in a controlled way especially when dealing with both pure and impure public goods. For instance medical care handed to the private sector would ensure access high quality service delivery as opposed to a government structure that is hindered by factors such as private responses to public sector provision that may render the public good being offered by the public sector less efficient. Economic incentives -EI Economic incentives being referred to the public good supply has everything to do with the control or influence the general public consumer and producer behavior (Bulte, Kooten & Swanson 7). The incentives are divide into two; positive economic incentives and negative economic incentives. Positive economic incentives Positive economic incentives reward people in pecuniary sort of way for making such eligible choices and certain behavioral traits. The positive economic incentive tends to leave the general public better off with monetary advantages and gains like favorable prices and discounts and encourage consumption of public goods. Negative economic incentives Negative economic incentive discourages or punishes consumers in a monetary regulation capacity for making certain choice and certain behavior. The general purpose of this economic incentive is to leave individuals worse off and instill a control measure so as to better manage certain public goods like paying of fees in public schools. The aim of economic incentives passed by governments in relation to impure public goods is important in monitoring the degree of rivalry and exclusivity (Bulte, Kooten & Swanson 26). This will help the government and private sector harmonize on the criteria to ensure impure public goods gives equal utility packages to different individuals. Works Cited Erwin H. Bulte, G. Cornelis van Kooten, Timothy Swanson. "Economic Incentives and Wildlife Conservation." Woring Paper (2003): 1-37. Rodrigo Arriagada, Charles Perrings. "Paying for international environment Public Goods and ." A journal of human environment (2011): 799-806. Read More