Public television has trouble raising
money for its services. This problem exists
the services it provides have less
value than their costs.
of moral hazard.
public television is a good example of
a signaling/screening problem.
television is a public good.
Suppose that three producers are
competing for a set of resources. Producer A can turn
these resources into goods worth $20.00 to consumers
(product A), Producer B can turn them into goods worth
$22.00 (product B), and Producer C can turn them into
goods worth $25.00 (product C).
Products A and C are public goods. The
total value of each is equally divided among twenty
different consumers. B is a private good. In this case,
which good can we expect to see produced in the
All have an equal chance of being produced.