User:MorelMWilliam/sandbox3

Activities and the concerned Social Institutions in their orders of importance

 * a) Consumption of Private Goods: Market, Household, Firm, Government (miniscule)


 * b) Production of Private Goods: Market, Firm, Government, Household


 * c) Exchange of Private Goods: Market, Household, Firm


 * d) Transfer of Private Goods: Household, Firm


 * e) Production of Public Goods: Government, Firms, Household


 * f) Exchange of Public Goods for Private Goods: Market, Household, Firms, Government

Provisioning and Production of Public goods : How do they differ?
Public goods are goods which all enjoy in common in the sense that each individual's consumption of such a good leads to no subtractions from any other individual's consumption of that good. A good can be classified public if it possesses the properties of non-rivalry and non-excludability.

Provisioning of public goods are the means by which the goods are made available to the public while production concerns the means by which the goods are ensured available for dispatch, read provisioning. Provisioning and production are the ways by which a public good's non-rivalry and non-excludability properties are maintained.

When making policy decisions regarding the participation of Private bodies in the management of public goods, while profitability (such as possible earnings from other sources and subsidies to fund the process), efficiency of private vs public production and potential beneficiaries/ privileged groups command spotlight in production phase, the main issues that hold the talk in provision phase are,


 * Should the good be provided?
 * How should it be efficiently priced, if it has to be?
 * How should the accountability on the availability of the good be dealt with?

On the production side, arrangements such as Assurance contracts, Coasian groups,Government subsidised private production, privileged groups exist while on the provisioning side, criteria such as Samuelson Rule and Lindhal pricing are used to determine if the society would be better off with or without the provisioning of a good as a public good.

Government and Market : Complementary?
Every individual's self interest would add to the society's common interest. Every individual's action, though driven by selfishness, would elevate the society along with the individual concerned to a better state. Thus expands Adam Smith's 'invisible hand'. So the parties on the demand and the supply side, each work in their own self interest, with the prevailing prices corresponding to their utilities as they see. This is a typical Market run economy. However, the underperformers in the economy, needy either in skills or money, tend to get pushed further and further away in the heat of such a competitive economic activity. The 'invisible hand' pats only those that perform and rewards only for the contributions handed in. The Government can be called into task here, to redistribute the economic pie in a way that doesn't seem discouraging for the star performers while also accommodating those failed by the market. The above setup, where in the Government has a role only in the event of a market failure demands perfectly competitive and highly efficient markets. However, this criterion is difficult to achieve and is possible only in exceptional circumstances. Collusion, information asymmetry are not so uncommon and definitely need Government's intervention to be tackled with. The private players also need assurances of upholding fair practices among the players by the Government. The Government is then expected to provide a proper and conductive infrastructure environment with a set of clear regulations. This way, the Government and the Market can complement for what each lack. In non market economies, the Government sets the prices of commodities, for a better allocation of resources, and this may or may not be a better tradeoff with efficiency.