Economics - Smoke Pollution - Data Response

include both companies and individuals. However some may be ill able to afford this. Another option would be to fine or otherwise prevent just those who emit the pollutant materials in other words incentivising them to become more environmentally friendly, this would include systems to tax those using the roads (congestion charging) and those in industry who produce large quantities of these materials. To do this everyone would have to be assessed to insure they pay the right amount for the pollution they create and rates would have to be set for every type of pollution, this would be expensive however it would ensure there were no free riders. This system would also prevent the problem from occurring in the first place rather than fixing one that has been allowed to exist.A public good is one that possesses the characteristics of non-rivalry and non-exclusivity, meaning that consumption by one person does not reduce the amount of that good available for consumption by others, for example one person watching a television program does not influence the ability of others to watch television. This also means that once it is provided no person can be excluded from using it, for example no one is excluded from receiving terrestrial television transitions. However due to these characteristics these goods would be underprovided for if the market mechanism was employed to provide them, this is because customers would not be prepared to pay for them, for example if the ministry of defence was privatised many people would not be prepared to pay for their protection. Yet this would not mean that they were not protected, as it is impossible to exclude them from the protection offered (these would be free riders), therefore governments intervene to force everyone to pay for these goods. However because these services are provided by the government and are therefore in the public sector there is no incentive to make a profit. This can lead to a lack of development and investment, it can also mean the providers are inefficient as they do not have to worry about overheads as taxes are simply increased or subsidies granted in order to insure the continuation of these services. For example the not only collects millions of pounds in license fees but also receives government subsidies. Therefore one further option is available, this combines the two mentioned above and helps maximise benefits while reducing costs. This is where private companies are paid by the government to provide a service and any profit they made is kept for themselves, this means that costs are minimised by the company and although they take a share of the money granted for the provision of the service the cost to the population is generally smaller or in other words a positive externality is created as the public benefits outweigh the private costs (although the private costs are public in this case). Furthermore in the government system ensures that even though there are no free riders no body is charged more than they can afford by assessing and invoicing in regards to income this ensures equity between everyone in the country in regards to these services. Otherwise goods that used to be though of as public goods can be transformed into quasi-public goods by the private sector, a good example of this is sky or cable television, this promotes inequity. In conclusion it is important for public goods to be provided by the government however there is some degree of flexibility for example for the security of the country some goods such as defence services should be provided exclusively by the government not only because they would be underprovided but also for the security of the country as corners are not ‘cut’ in an attempt to increase profits however others such as street lighting can be provided by private companies yet funded by the government as this ensures the maximisation of positive externalities.