A case for higher spending on public goods

Abstract

A case for higher spending on public goods Yew-Kwang Ng, Emeritus Professor in the Department of Economics at Monash University in Australia, argues in favor of increased spending on public goods. An important issue in public policy is how much we should spend on public goods. A pure public good has the characteristic that its usage by some does not reduce its availability to others. Examples include defense, broadcasting, publication, and research. Private goods (subsuming services) like apples or haircuts are typically paid for by consumers. In a market economy, their provision and prices are thus typically determined by the balance of supply and demand. The demand is in accordance with the willingness to pay by the consumers; this, in turn, depends on their marginal valuation (the additional value provided by consuming another unit). On the other hand, the supply depends on the marginal costs of production (the additional costs of producing another unit).