Write down differences between public good and merit goods
1. Nature: Public goods are non-excludable and non-rivalrous in consumption, which means that they are available to everyone and one person's consumption does not reduce the availability to others. Merit goods, on the other hand, can be both excludable and rivalrous in consumption.
2. Provision: Public goods are usually provided by the government or public sector entities, such as national defense, street lighting, or clean air. Merit goods are also often provided by the government, but can also be provided by the private sector, such as education, healthcare, or vaccinations.
3. Market Failure: Public goods are often provided to correct market failures, as they would be underprovided by the private sector due to the free-rider problem. Merit goods are also provided to address market failures, but typically due to information asymmetry or externalities.
4. Demand: Public goods are usually not subject to individual demand and are supplied based on social demand, as they benefit society as a whole. Merit goods, however, are subject to individual demand and are consumed based on personal preferences or needs.
5. Financing: Public goods are usually financed through taxes or government funding, as they are considered a collective benefit. Merit goods can be financed through a variety of sources, including taxes, user fees, or private payments.
6. Importance: Public goods are considered essential for the overall well-being and functioning of a society, such as national security or infrastructure. Merit goods are goods or services that are deemed important or beneficial for individuals or society, such as education or healthcare.
7. Consumption and Decision-making: Public goods are often determined collectively through governmental or democratic decision-making processes, as they impact the entire society. Merit goods, on the other hand, are often consumed based on individual choices or decisions, although government intervention may influence their provision or accessibility.
8. Externality: Public goods do not typically generate externalities, as their benefits are enjoyed by everyone in society. Merit goods, however, can generate positive externalities, such as a more educated workforce, or negative externalities, such as increased healthcare costs due to unhealthy behaviors.
9. Transferability: Public goods are not easily transferable or tradable because they are not subject to exclusive ownership. Merit goods, however, can be traded or transferred between individuals or organizations, as they are subject to ownership and can have market value.
Overall, public goods and merit goods differ in terms of their nature, provision, demand, financing, importance, decision-making processes, externalities, transferability, and impact on society. Public goods are primarily provided by the government to address market failures and benefit society as a whole, while merit goods can be provided by both public and private sectors to address individual or societal needs and preferences.