Why the market system cannot effectively guarantee the supply of public goods

First of all, if the market is not perfectly competitive, that is, it does not achieve Pareto optimality.

Then it doesn't matter if it's a public good.

Neither quasi-public goods nor consumer goods can be effectively supplied.

Second, under the condition that the market is completely competitive, the effective supply of public goods cannot be guaranteed due to their non-fear of others and non-competition (which are also the two most important characteristics that distinguish public goods from other goods).

Public goods refer to the goods enjoyed by the whole society, that is, all members of society, and these public goods can only be provided by ** in a certain form, which is determined by the non-exclusivity and non-competition of its consumption.

Public goods have two important characteristics: one is non-exclusivity. Once a public good has been produced, there is no way to prevent others from consuming it, which means that it is often impossible to exclude any potential consumer from benefiting from it.

Because as long as it exists, you can consume it, and I can consume it, regardless of whether you pay for it or not. The second is non-competition. The consumption of a public good by one person does not prevent or affect the concurrent consumption of the good by others, i.e. it does not diminish the benefit that others derive from the good, since the cost of providing the good to one or more people is the same.

Typical examples such as the police and national defense, the police ensure the safety of the society; National defense provides security for all citizens, and it cannot and should not exclude anyone. This is fundamentally different from personal belongings. Personal goods are exclusive and competitive in consumption, for example, if I consume a loaf of bread, you can no longer consume that bread; At the same time, just because I consume this bread does not mean that you are necessarily a "potential consumer" of another bread.

The characteristics of public goods determine the necessity and obvious advantages of ** provision. The different characteristics of public goods and private goods determine the different ways in which they are provided. The market mechanisms that prevail in the field of private goods appear powerless in the field of public goods.

This is because the non-exclusive and non-competitive nature of public goods makes "free-riding" unavoidable. It is precisely because there is the possibility of free-riding without spending money in the consumption of public goods, that more and more "rational economic people" will consider their own costs and benefits to enjoy the maximum benefits of public goods at the lowest cost or even no cost, that is, to adopt the free-rider method. If the free-rider phenomenon is allowed to persist in the long run, the final result will inevitably be a shortage of public goods, that is, without street lights, society will once again fall into a "dark or disorderly state."

This is by no means the normal state of affairs in a society. This shows that it is difficult for the field of public goods to be effective by relying on market mechanisms, and it has become a natural choice for people to provide them.

If the national strength is strong and the economic strength is strong, it can provide more pure public goods, and if it does not have the economic ability to provide pure public goods, it should provide quasi-public goods as much as possible, and then turn it into pure public goods at a certain time, so that the people's living standards will be improved.

1. The supply of all public goods is mainly in the following ways:

1. ** supply; 2. Enterprise supply (private supply); 3. Joint supply of government and enterprises.

Therefore, there are many theories in economics such as Pareto equilibrium theory, which can be referred to for the effective supply of public goods.

Public goods cannot be provided by the market, and are limited by factors such as non-exclusivity, non-competition, externalities, scale of production, and natural monopoly.

2. Non-competitiveness: public goods are not competitive for consumption, and the increase in the number of consumers does not have an impact on production costs.

3. Externalities: The externalities of public goods are difficult to measure accurately, and the long-term benefits generated are also difficult to calculate.

4. The scale of production and the natural monopoly: only under the conditions of economies of scale, the average cost of public goods can be reduced to a certain extent, otherwise it will form waste; The economies of scale of public goods such as infrastructure determine their natural monopoly, which excludes effective competition.

Addressing the issue of non-exclusivity and non-competition through mandatory taxation. In this sense, taxation can be seen as the provision of public goods.

, thus overcoming the free ride-hailing behavior in the provision of public goods. Another advantage of supply is its privilege advantage.

2. The provision of all quasi-public goods by the public sector is both inefficient and unfair. This is because there are levels of quasi-public goods, some of which are beneficiaries or consumers of the entire population (e.g., national highways and railways), while others are partial (e.g., local roads and municipal facilities).

3. Although the ability is growing in the long run, in any period, the ability is limited, and it is impossible to be omnipotent, and the ability is the social productive force.

The growth of social productive forces also limits the growth of capacity, and social productivity is limited in any period, and the ability cannot be unlimited.

Disadvantages: 1. There is an asymmetry between information and these public sectors, and the result is that it leads to the inefficient operation of section rolling resources.

2. Under the premise that collective rationality is greater than the assumption of individual rationality, people have come to the conclusion that the supply of natural monopoly quasi-public goods is better than the market supply in terms of efficiency, and the theoretical rationality of this view cannot be denied. However, practice has shown that monopolizing the supply of public goods often leads to inefficiency.

3. The "economic man" characteristics of **** may lead to the failure of ** in the supply of quasi-public goods. The goal of the behavior is the same as the welfare of the whole society.

Maximizing goals is not necessarily a result, and may even be in conflict.

1. First, China's supply system is generally export-oriented, and now external demand has decreased, and some overcapacity has been overcapacity.

2. Second, in the past, the supply system was mainly oriented to low-income groups, and it did not keep up with the rapidly expanding middle-income group in China and the changed consumption structure.

3. Third, in the past, the supply system could adapt to the wave consumption, but the ability to meet the diversification and personalized consumption was relatively poor, and there was no problem with the total production capacity, but there were some problems in the structure, such as color, variety, specification, and safety, which could not meet the consumer demand, so some consumption flowed abroad.

4. Fourth, the production capacity of some industries has reached the peak of physical nature, that is to say, no matter how the mold is reduced, it is difficult for the product to be sold, and no matter how to expand investment, it is difficult for demand to digest the existing production capacity.

Why public goods cannot regulate supply and demand through market mechanismsPublic goods refer to products and services that are neither exclusive nor competitive. Exclusivity refers to the fact that when a person uses or consumes a product or service, it can exclude and prevent others from using or consuming that product or service; Competitiveness is when one person uses or consumes a product or service, which reduces the opportunity for others to use or consume that product or service. The reason why the use of public goods is non-exclusive and non-competitive is that the production of public goods is indivisible, such as the services provided by national defense and police affairs, which cannot be divided into many small units like bread and clothing, but can only be used by all members of society as a whole.

When items can be subdivided like private items, consumers can buy a certain amount of what they need to enjoy it alone, excluding others from sharing. In this case, the degree of consumer preference for goods can be expressed by the willingness to pay, so that their consumption can reach the maximum satisfaction, so that the market can play a dominant role in the allocation of resources. Because public goods cannot be subdivided, people's consumption of public goods cannot be determined by the market, and the mechanism cannot truthfully reflect the supply and demand of public goods in the society.

In this way, public goods can only be provided by ** according to the common needs of the members of society. If people are to produce these items according to the preferences expressed by **, no one is willing to show their preferences, and only hopes that others will guess that their friends will produce these items in the next life, and they will sit back and enjoy the results, so that public goods cannot be produced. Therefore, the market is dysfunctional in the production of public goods.

Since public goods are not competitive for consumption, the opportunity cost of any one consumer to consume one unit of public goods is zero. This means that no consumer has to compete with anyone else for the public goods he consumes. As a result, the market is no longer competitive.

If the consumer realizes that the opportunity cost of his own consumption is zero, he will pay the producer as little as possible in exchange for the right to spend public goods. If all consumers did so, the costs they paid would not be enough to cover the cost of producing public goods. As a result, output is less than optimal, or even non-existent, and public goods cannot be supplied by the market.

Hello dear, glad to answer for you! The following is the answer I have found for you, please refer to: Why the private market cannot efficiently provide public goods 1

First of all, the market is not perfectly competitive, that is, if the Pareto optimum is not reached, then no public goods, quasi-public goods, or consumer goods can be effectively supplied. 2.Secondly, under the condition that the market is completely competitive, the non-fear of others and non-competition of public goods (which are also the two most important characteristics that distinguish public goods from other goods) cannot guarantee effective supply.

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The ** of the product is generated by the comparison of the supply and demand of the market.

Public goods are immeasurable because of their demand, but their supply is limited because of limited resources.

The market can provide other products, but the demand for public goods cannot be measured, and the market cannot provide them. The provision of public goods is also blind and does not accurately measure demand. Moreover, the provision is inefficient and wasteful and idle.