Reference no: EM13114043

Introduction

What is this report about

Why has it been written

What will this report show

What are socially desirable merit goods

Main Body

Explain the term merit good and give examples of this.

Explain the term demerit goods and give examples of this.

What are externalities? What are positive and negative externalities?

Give examples of Positive and negative externalities.

Give a brief introduction about your chosen merit good and explain the role of government in providing this merit good to the public. E.g direct provision, subsidies etc.

Discuss how the private sector can produce this good and the possible issues that may arise.

Discuss the positive externalities of your chosen merit good. Use economic theory to Illustrate how this externality may occur.

Discuss how there would be market failure if the free market were left to provide this merit good.

Evaluate the different ways by which the government may control this possible market failure. For example the use of direct provision by the government or subsidies/grants and government regulations.

Conclusions and Recommendations

Summarise why merit goods may produce positive externality and a possible market failure and why it is important for the government to intervene. Give a logical conclusion and opinion and recommend alternative method of government intervention in the provision of merit goods.