Science Fair Project Encyclopedia
Merit good
A merit good is a good deemed to have positive externalities, and provided by the government because of this, in order to internalise the externality. Inefficient provision of merit goods leads to "government failure".
Merit goods help the society due to their positive externalities, and are not produced with the aim of profit maximization. The private optimum will be less than the social optimum. Thus the government, if not providing the merit goods, will try its best to increase production and quantity supplied by providing subsidies, etc...
09-23-2007 01:00:40
The contents of this article is licensed from www.wikipedia.org under the GNU Free Documentation License. Click here to see the transparent copy and copyright details
The contents of this article is licensed from www.wikipedia.org under the GNU Free Documentation License. Click here to see the transparent copy and copyright details