Suddenly, this 7th semester became the hardest semester I’ve ever had… Public Finance, International Banking, Business Finance… three core subjects that I’ve taken during this short semester feels like ghost… huhuhu… however, I’ll never give up! Study study study always… presentation presentation always… discussion… debating… always become common meals every day in my life…
However, I feel interesting during class debating, especially for Public Finance… it talks about government…about welfare…about public…about Indonesia and other countries…
At this luvely time, I wanna share my summary about Public Goods…
What is Public goods? Do you think that public goods in Indonesia are satisfying enough??
Public Good
- It is good that can consumed by public weather its build from human or from nature.
- It characterized by nonrivalness and nonexcludability in consumption. Each person consumes the same amount, but not necessarily the preferred amount of public goods.
- It can be provided privately. Ex: Individuals donating money to maintain public spaces, which is how Central Park in New York City manages to have such beautiful flowers.
- Classification as a public is not absolute, it can be depends on the market condition. For example: A scenic view is a pure public good when there are a small number of a people involved. But as the number of sightseers increases, the area becomes congested. The same “quantity” of the scenic view is being “consumed” by each person, but its quality decreases with the number of people.
- In German, education is free from kindergarten to university. It can be considered as Purely Public Goods.
- Honesty and Fairly Income Distribution; which are not conventionally thought of as commodities have public good characteristics. Each person gains satisfaction from living in a good society and no one can be excluded from having it.
Private Good
- It is not necessary provided exclusively by the private sector.
- There are many publicly provided private good; Medical services and Housing are two examples of private goods provided by governments.
- The characteristic of private good is rival and excludable.
Public Goods
Everyone sees the same quantity and people decide what price they are willing to pay.
Private Goods
Everyone sees the same price and people decide what quantity they want.
Problem in Achieving Efficiency
Free Rider
Make no contributions to the group exchange; take benefit from everyone else’s donations while putting nothing in themselves.
The Privatization Debate
Privatization
Taking services that are supplied by the government and turn over to the private sector for provision and or production.
- Public versus private provisionThe criteria should be used to select the right mix of public & private provision: relative wage and material cost, administrative costs, diversity of tastes, and distributional Issues.
- Public versus private production; incomplete contracts, market environment
Education
Education is primarily a private good, improving student’s welfare by enhancing their ability to earn a living and, more generally, to deal with life.
What do expenditures for public education accomplish?
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Debates: Do higher expenditures lead to better education?
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Research attempts to measure the relationship between usage levels of various inputs purchased to the amount of education produced.
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The impact of school expenditures on educational attainment is an important question; it doesn’t give us direct evidence on another variable that is critical – earnings.
Love &; Care
