Question

Charlie likes watching Downton Abby and other shows on public television. However, he never sends any money during the fund-raising drives (or any other time). What measures can the government put in place to solve this situation?

Answer 1

This a case of market failures because of public goods. In public goods, it is not possible to restrict the non-payers from availing the services. There are two possible solutions in this case:

1) The government can charge a fixed annual fee to all television owners in the area irrespective of whether one watches the channels or not.

2) The government can also privatize the public television and this will make it a private good. The private service provider will only provide services to the subscribers paying for the services.