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Wednesday, June 29, 2005

Public good

A public good is good which can be used by all without paying a price. In most of the countries, the public goods are being produced by the respective governments by incurring high costs. For its usage an individual or a company does not pay a price. A typical example is that of a public road, where a fee is not collected for its usage. The burden of producing public goods falls on the shoulders of the government. Some costs are paid off using the government taxes such as road tax, sales tax etc.
I believe that it is the duty of the private in a developing country to offer such services owing to the already high burden on the goverment. The government can give the private entrepreneur high rates of subsidies on undertaking this kind of work as it requires a very high rate of capital investment.
Another type of good where a price is paid for the public good is known as a Merit good. Charging a small amount for building infrastructure can be justified as it accelerates development. Thus i am of the opinion of converting most public goods to merit goods.

4 comments:

Jithu said...

cool! nice fundas on economics. keep it going.

silverine said...

Hi,

Came here via Kerala Blog Roll and groan.... please don't load us with more cess in the guise of merit good or not so meritious good.. Wait till you get outta college and you will be singing a different tune. :))

alex said...

Well Silverine,
I have vision of a developed India. I know a cess will be a bueden but the government needs resources, mainly financial to go about its building of infrastructure. By converting public goods into merit goods, it will be expected to provide the state of the art services to the people.

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