Many would argue that in a capitalistic economy, the government cannot provide goods and services as efficiently as the private sector. For example, most arguments for and against the affordable health care act center on the efficiency of the government in managing and operating a health care system. Do you think the government can provide goods and services to the public as efficiently as or better than the private sector? Support your conclusions with examples and applications.
Concepts
Before answering this question, several basic concepts will be explained. People can find three types of goods on the market; private goods, public goods and quasi-public goods (McConnell, Brue, Flynn,2009). The private goods are provided by the free market system, in the spirit of the free initiative and for the purpose of generating profit for the supplier and a high level of utility for the buyer. The private goods have two main characteristics. The first one is rivalry and it means that if one consumer buys a product, the other cannot have the same exact item at the same time. For example, what Mark buys, Twain cannot have. The second one characteristic is excludability. Mark can only buy the prodXXX XX he XXX afford XXX he XX willing XX pay the price for it. XXXXXXXXX, not everyone can XXX the same XXXXXXXX. XXXXX XXX characteristics XXXX XXX XXXXXXXXX XXXXXX and sell XXXXX products XXX XXXXXXXX in a XXXXXXXXXX way. XX rivalry, XXX XXXXXX will generate XXXXXXXXXXX XX the demand XXXX and by excludability, XXX XXXXXXXX XXXX XXXX give XXX product to the XXXXXX that can afford it. XXX XXXXXXX XXXXX, XXXXXX is XXX key XXXXXX for XXXXXXXXXX XXX XXXXXXXXXX efficiency; XXX XXXX XXXXXXXXX, the XXXX XXXXXXXXX XXXXXX XXX a supplier. XX the opposite side, XXX public XXXXX XXX XXXXXXXXXXXXX by XXX-XXXXXXX XXX non-excludability (XXXXXXXXX, Brue, XXXXX, XXXX). XXXXXXXX, public order, street lighting and XXXXXXXXX parks XXX all examples XX XXXXXX XXXXX. XX XXXXXXX in XXX XXXX, the users XXXX not XXXXXXX the XXXXXXXX and XXXXXXXX in the XXXX will get XXX XXXX XXXXXXX XXX XXXXXXXX in that moment. Also, XX taking a walk in the XXXX, XXX users will XXX XXXXXXX others from doing XXX XXXX thing. Everyone can XXXXXXX from a walk in the XXXX XXXXXXX any monetary XXXXXXXXXXXX. XXXXXXXXX, the XXXXXX park XXXXXXXXXXXXXX are not profit-driven. XXX public XXXXX are XXX-XXXXXXXXX and most XXXXXX believe that XXX benefits XXX exceeding the XXXXX (McConnell, Brue, Flynn,XXXX). XXXXXXX in XXX park has a XXXXXXXX XXXXXX XX the XXXXXX and XXX well-XXXXX XX XXX users. XXXXXXX, XXXXX positive XXXXXXX are hard XX XXXXXXXX and XXXXXXXX. XXXXXXXXX, the XXXX market would not allocate enough XXXXXXXXX XX XXXXXXX and XXXXXXXX XXXX parks XXXXXXX XXX XXXX of capital XXXXXXXXXX XXXXXXXXX cannot estimate XXX potential XXXXXX and utility. Between XXXXX two XXXXX of XXXXX are XXX XXXXX-XXXXXX goods. These XXX XXXXX XXXX could be XXXXXXXX XX XXX free market but the government XXXXXXXX them to make XXXX that everyone XXX access them. XXX XXXXXXX, XXXX XXXXXXXX and education are quasi-public goods. XX XXXXX be unimaginable to think XXXXX a fire department refusing a mission because it will spend XXXX than it gains XXXX a possible fee. However, the XXXXX-XXXXXX XXXXX XXXXXXXXX XXX not profit-driven, XXXXXXXXX, they don't XXXX XXX XXXXXXXX incentive to XX efficient XXX XXX XXXXX.XXXXXXXXX, the XXXXXXXXXX XXXXXX provide XXXXX XXX XXXXXXXX XX XXX XXXXXX XX efficiently XX the XXXXXXX sector. Even if XXXX quasi-XXXXXX goods are XXX-XXXXX and all XXXXXX XXXXX are tax XXXXXXXXX, these XXXXXX or budget allowances XXX XXX XX using a political decision and XXX an economic XXX. XXX private goods, profit XX the XXX XXXXXXXXX XXX XXXXX XXXXXXXXX XXX it can be precisely XXXXXXXX for XXXXX product XXX company. For XXXXXX XXXXX, XXXXXXXX XXXXXXX and government XXXXXXXX rates can XXXXXXXX the public goods providers XX XX XXXXXXXXX XXX it is hard to XXXXXXXX what XXXXXX XXXXX are XXXXXXXXXXX or XXX. For XXXXXXX, one can vote for the mayor because he likes the new parks and other XXX vote for the improved XXXXXXX XXXXXXXXXX XXXXXX.
Application:
XXX’s suppose XXXX XXX XXXXXXXXXX wants to give XXXXXX to free XXXXXXXXXXX XX everyone by nationalizing XXX XXXXXX system. XXXXXXXXX, electricity moves from being a XXXXXXX XXXX XX a quasi-XXXXXX good. XXXXXXXXXXX cannot XXXXXX a XXXXXXX XXXXXX XXXX XXXXXXX the resource XX limited XXX XXXX network has a limited number XX XXXXX it can sustain. If XXXXXXXXXXX becomes XXXX, the XXXXX XXXX have XX financial incentive to XXX electricity XXXX efficient. On the other side, XXX XXXXX plants XXX the XXXXXXXXXXXX have XX XXXXXXXXX for XXXXXXXXX a XXXXXXXX XXXXX of quality XXX XXXXXX. XXXXXXX a XXXXXX XXXXXXXXXXX, theXXXX XX XXXXXXX investment decisions will lack the XXXXXX on investment XXXXXXXXXX.
XXXXXXXXXX:
Public XXX XXXXX-XXXXXX goods XXXXXXXXX XXXX always XXXX a lower efficiency. XXXXXXX, efficiency is XXX the same XXXXX XXXX XXXXXXX. XXXX-market XXXXXXX: Fire departments can deploy XXX XXX as XXXX resources they XXXX XX fight a XXXX. XXX XXXXXX material benefit plus the positive externalities will XXXXXX XXX XXXXX. The XXXXXX XXXXXXXX XXXXXXX XX how much XXX XXXXX XX fire is worth and XXX positive externality is the XXXXXX that will XXXXX have where to live in. X XXXXXXX XXXXXXXX XXXX XXXXXXXX XXX cost/XXXXXXX XXXXX from XXXXXXX perspective'; XXX XXXXXXX XXXX the XXXXXXXXX company or community XXX XXX costs XX extinguish the XXXX fast.
- XX a XXXX- XXXXXX XXXXXXX XXXXX XXXX some degree XX XXXXXXXXXXX or risk. Some XX XXXX risk is XXXXXXXXXXXX, and some XXX not. XXXXXXXX the different types XX XXXX that a business XXXXX XXXXXXXXX in XXX marketplace and XXXXXXXX XXXXXXX XXXX XXX controllable or uncontrollable. How can a XXXXXXXX XXXXXXXXXXX XXXX XXXX the XXXXXXXX-making XXXXXXX?
XXXXXXXX
The XXXXXXXX XXXXXXXXXX XXX many classifications XXX uncertainty XXX XXXXX. XXXX response XXXX use XXX elaborated XX XXXXXX Kaplan XXX Anette Mikes XXX published in XXXXXXX Business Review in 2012. XXX first ones are preventable risks. XXXXX XXX risks that can XX XXXXXXX XXXXXXX XXX controlled by the XXXXXXX. Therefore, XXXXX XXXXX XXX be XXXXXXXXXX, XXXXXXX or XXXXXXX (Kaplan, Mikes, XXXX). For XXXXXXX, a company can buy a machine that XXX produce XX XXXXX per hours but it XXXX be XXXX XXXXXXXXX XX XXXXXX by XXX workers or a XXXXXXX that XXX XXXXXXX 18 units XXX XXXX but it will be a lot XXXXX than the XXXXX one. XXX each XXXXXX, XXX company XXXX put XXX two XXXXXXXXX in XXXXXXX: XXXX XXXXXX vs. productivity. The XXXXXX category is made of strategy XXXXX. XXXXX are risks XXXX XXX XXXXXXX XXX XXXXXXXXX XXXXXXX XXX reduce. XXX example, a company wants XX expand its XXXXXXXXXX in XXXXXXX XXXX. XXX market XXXXXXX show XXXX in XXXXXX, the new market XXXX XXXXXXXX enough demand to XXXXXXX the XXXXXXXX in a XXXXXXXXXX way. XXXXXXX, XXX XXXXXXX cannot XXXXXXX how XXXX XXXXXX will choose their company instead of XXX XXXX already on the market. Investing in XXXX XXX market can XXXXXX a new source XX revenue or it XXX XXXX XXX XXXXXXX lose XXXXX XXX other resources.The third XXXXXXXX XX XXXX XX external XXXXX. These XXX risks XXXX the companies usually cannot XXXXXXX. XXX these risks are XXXXXXXXXXXXXX (XXXXXX, Mikes, 2012). These XXXXX will come XXXX the XXXXXXXX environment XX XXX XXXXXXXXXXXX: XXX macroeconomic equilibrium, the level XX XXXXXX supply XXX XXXXXX, political XXXXXXX, legal restrictions, XXXXXXXXXXX XXX even XXXXXXX XXXXXXXXX. XXX example, a company XXXX see an XXXXXXXX in XXX workforce costs XXXXXXX the XXXXXXXXXX imposed a new minimum wage. Another example XX XXXX XXX overall XXXXXX demand drops because XXXXXX can no longer afford to buy too XXXX XXXXX XX XXXX. In the XXXX XXXX, XXX XXXXXX can stay XXXXX it XX XXX the XXXXXXXXXXX might fight XXXX and XXXXXX XXXXX market XXXXX XX lowering the XXXXX, XXXXXXXXXX their efficiency or improving XXX marketing and XXXXXXX XXXXXXX.
XXXXXXXXXXX
A XXXXXXXX can incorporate risk XXXX XXX XXXXXXXX-making process by creating and XXXXXXXXXXXX a XXXX-XXXXXXXXXX XXXXXXXX. XXX first XXXX to XXXXXXXXX a risk-management XX XX XXXXXXXX the risks the organization might face. XXX classification can XX noticed in the previous XXXXXXX XX XXXX answer. The second XXXX is XX XXXXXX more XXXXXXXXXXX XXX try to predict the (negative) impact XXX risk XXX have. XX XXXX XXXX, organizations can conduct XXXXXX XXXXXXX, literature XXXXXXX or XXXX XXXXXXXX XXXXXXX XX analyze the risk (Kaplan, Mikes, 2012). XXXXXXX, XXXX XXXX XXXX XXX provide a precise XXXXXX for XXXXXXXX XXX uncontrollable XXXXX. The third XXXX is to elaborate an XXXXXX or reaction to XXX XXXX. XX a XXXXXXXXXX XXXX XXXXX the XXXXX, the XXXXXXX XXXXXX already know how to XXXXXXX. XXX company should know XX it will XX able XX sustain a XXXXX war or implement another XXXXXXXX like XXXXXXXXX the XXXXXXX XX its products, XXXXXXXX XXX XXXXXXXXX efforts or XXXX XXXXXXXX. The last XXXX XXXX XX XX evaluate the XXXXXXXX taken XXX XX XXXX XXXXXXX XX XXXXXXXX XXX risk or not XXX XX XXXXXXXXX XXXX up XXXX XXX solutions.
XXXXXXXXXX
XXXXX XXXXXXXX XXXXXXX taking a risk is XXXXXXXXXX. XXXX a perfect XXXXXXXXXXXX will XXXX to deal XXXX uncontrollable XXXXX. XXX XXXXXXXXXXX XXX XXXXXXXX XXXXX XXX part of the XXXXXXX investment decisions since XXX company can predict and evaluate XXXX. XXX XXXXXXXXXXXXXX risks are XXXXXXXXXXXXX and the only XXXXX XXXX can mitigate XXXX XX a fast XXXXXXXX XXX an XXXXXXX XXXXXXXXX organization that XXX XXXXX to XXX new XXXXXXXXXX
Reference:
Kaplan, X. Mikes, X. (2012), XXXXXXXX XXXX, X XXX XXXXXXXXX, XXXXXXXXX in XXXXXXX XXXXXXXX XXXXXX, June 2012 Issue, XXXXXX XXXXXXX, XXXXXXXXX XXXX hbr.XXX/XXXX/XX/managing-XXXXX-a-XXX-XXXXXXXXX
McConnell, Brue, XXXXX, (XXXX), Economics, XXXXXXXXXX, XXXXXXXX XXX XXXXXXXX, McGraw-XXXX XXX York, ISBN: XXX-X-XX-XXXXXX-X
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