How does government intervention help in correcting the problem of under-provision of public goods?

Government intervention helps in correcting the under-provision of public goods by funding and regulating their production and distribution.

Public goods, by their nature, are non-excludable and non-rivalrous. This means that once they are provided, everyone can use them without reducing their availability to others. Examples include street lighting, public parks, and national defence. However, due to these characteristics, public goods often face the problem of under-provision. This is because private firms, driven by profit motives, may not find it profitable to provide these goods as they cannot exclude non-payers from benefiting. This leads to what economists call a 'market failure'.

Government intervention can correct this market failure in several ways. Firstly, the government can directly provide these public goods. This is often seen in the case of national defence and law enforcement, where the government takes on the role of provider. By doing so, the government ensures that these essential services are available to all citizens, regardless of their ability to pay.

Secondly, the government can fund the provision of public goods through taxation. This is a common approach for goods like public parks and street lighting. The costs of these goods are covered by the government using the tax revenue it collects from citizens and businesses. This way, the goods are provided to everyone, overcoming the free-rider problem that often leads to under-provision.

Thirdly, the government can regulate the provision of public goods. For instance, it can set standards for the quality and quantity of public goods provided, ensuring that they meet the needs of the population. It can also enforce laws that prevent private firms from excluding individuals from using public goods, thereby ensuring their availability to all.

In conclusion, government intervention plays a crucial role in correcting the under-provision of public goods. By directly providing, funding, and regulating the provision of these goods, the government can ensure that they are available to all, thereby addressing the market failure that often arises in their provision.