3.1.1—Public goods non-provision

Because public goods are non-rival and non-excludable, individuals can benefit without paying, so private markets may underprovide or not provide them at all.

Government can finance provision through taxation, direct production or contracts, but must estimate demand, cost and the socially valuable quantity. Provision still has an opportunity cost.

A publicly funded flood-warning system can protect many households simultaneously; charging each household separately may fail because people can wait for others to contribute.

Public provision does not mean unlimited free supply or zero cost; scarce labour and finance are still used.