Public Goods v/s Merit Goods v/s Private Goods: UPSC Daily Important Topic | 5 September 2022

Public Goods v/s Merit Goods v/s Private Goods

In Economics the products or services are of three types:

✓Public Goods: These are non-excludable and non-rival in consumption like national defence, food control system, railways, highway and information on Covid etc.

Such services are difficult to be owned by the individuals even if they are willing to pay for these and are necessarily to be provided by the governments.

Daily UPSC Preparation:September 2022

✓Merit Goods: In contrast to pure public goods, merit goods are, provided through the market, but not necessarily in sufficient quantities to maximize social welfare like education, health , welfare services, housing, fire-protection, refuse collection and public parks.

These can be acquired by the individuals at a personal level and can provide certain benefits to the larger society.

For example, an individual can buy a mask which would prevent Covid from infecting others and promote social good. Therefore, the government is justified in undertaking free distribution of masks.

✓Private Goods: A product or service produced by a privately owned business and purchased to increase the utility, or satisfaction, of the buyer.

The majority of the goods and services consumed in a market economy are private goods and their prices are determined to some degree by the market forces of supply and demand.

These can be acquired at the individual level and also provide most benefits to the individual and do not lead to a tangible social benefit.

The distinction between merit and private goods is laid bare by comparing the sanitization movement in the country with the free or subsidized distribution of electricity.