Question

How would Taxation be a solution to solve the public goods game

How would Taxation be a solution to solve the public goods game

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Answer #1

Answer) Public goods are the goods which are non rival and non excludable in nature. Such as defense services, where one citizen can't be denied protection. Due to non excludable trait, individual tend to free ride upon the goods and services without making any payment.

Tax is a payment charged by the government for providing services to the citizens such as law and order. Tax can be used to address the issue of non excludability. As no representation can be provided if the taxes are not paid. Imposition of tax such as direct or indirect can be used by the government to collect the fund in order to provide services to the citizens.

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