PUBLIC GOODS

Public goods are Non Rival - if one consumer consumes but still the goods can be
consumed by others. Eg. Defence system.
Public Goods are Non Excludable - cannot prevent someone to not use – light house, if
someone was installed it everyone can use u cannot stop them– streetlight -road- bridge.
The result: no reason for the consumer to reveal his/her valuation of the good or
service
HENCE MARKETS FAIL
for exam – make a matrix 4 situation-
1.NR – NE – public good
2.NR – E
3.R- NE
4.R - E
PROVISION OF PUBLIC GOODS

Government alone being responsible

for the provision of public goods.
Public Private Partnerships (P3s)
Eg. Bridges, Metro are being constructed by both like construction
comp. like L&T are given tenders – toll tax collected by private share
given to govt.

Managerial Economics, 2e
ALL RIGHTS RESERVED
©Oxford University
PUBLIC PRIVATE
PARTNERSHIPS (PPP)
PPPs are contractual arrangements between a
government and a private party for the provision
of Assets and the delivery of services that have
been traditionally provided by the public sector
The central point is the sharing of decision
making authority
The not-so central point is the sharing of rewards
and risks

Managerial Economics, 2e
ALL RIGHTS RESERVED
©Oxford University