Unit 2 → Subtopic 2.10
Why Are Some Public Goods Underprovided?
Public goods—such as street lighting, public parks, national defense, and clean air—are essential for society but are often underprovided by the private sector. Unlike private goods, public goods are non-excludable (available to everyone) and non-rivalrous (one person’s use does not diminish availability to others), making it difficult for businesses to generate profit from them. As a result, governments must step in to provide these goods, but even then, funding constraints, political decisions, and economic inefficiencies can lead to underprovision. This project challenges students to investigate why some public goods are underprovided and what economic factors contribute to this market failure.
Students will analyze real-world examples of public goods that are underfunded or insufficiently available, such as inadequate public transportation systems, lack of affordable healthcare, underdeveloped infrastructure, or environmental protection efforts. They should explore why the private sector avoids producing these goods, why government funding is sometimes limited, and how the "free-rider problem" affects public good provision.
A key focus of this project will be understanding why governments struggle to allocate resources efficiently, particularly in cases where political priorities, budget constraints, or corruption interfere with funding public goods. Students should investigate whether alternative funding models, such as public-private partnerships, taxation, or government incentives, could improve public good availability.
The final investigation report will summarize case studies, economic reasoning, and policy solutions, helping students understand how market failure occurs in the context of public goods and how different economic systems attempt to resolve this issue. The goal is for students to develop a critical perspective on government intervention, market inefficiencies, and the role of economic incentives in public good provision.
Recommended Procedure:
Research Public Goods and Market Failure – Define what public goods are and why they are often underprovided due to the free-rider problem and lack of profitability.
Identify and Analyze Underprovided Public Goods – Research real-world cases where public goods are underfunded, such as failing infrastructure, healthcare shortages, or insufficient environmental protections.
Investigate Government Constraints and Policy Challenges – Explore why governments struggle to fund public goods adequately, considering budget limitations, political interests, and inefficiencies.
Evaluate Alternative Solutions for Public Good Provision – Research how taxation, government incentives, or private-sector partnerships can improve access to public goods.
Write an Investigation Report on Public Goods and Market Failure – Present findings in a structured report, explaining why some public goods are underprovided and proposing possible solutions.
Suggested Sources:
Understanding Public Goods and Market Failure:
Investopedia: Public Goods and the Free-Rider Problem – https://www.investopedia.com
Khan Academy: Market Failure and Government Intervention – https://www.khanacademy.org
2. Case Studies on Underprovided Public Goods:
Harvard Business Review: Why Some Public Services Fail – https://hbr.org
The Balance: Why Governments Struggle to Fund Public Goods – https://www.thebalancemoney.com
3. Government Policy and Economic Interventions:
World Bank: Financing Public Goods in Developing Nations – https://www.worldbank.org
OECD: How Governments Can Improve Public Good Provision – https://www.oecd.org
4. Alternative Solutions to Public Good Underprovision:
IMF: Public-Private Partnerships in Public Goods Provision – https://www.imf.org
United Nations: Sustainable Development and Public Infrastructure – https://www.un.org
Grading Rubric:
Total Points: __ /20
