Question

discuss why in many countries certain types of education and health care are provided as private goods and not as merit goods

Answer 1

MERIT GOODS ARE PROVIDED BY BOTH PUBLIC AND PRIVATELY, THEREFORE THER IS A DANGER OF CHEATING WITH THE PATIENTS OR WITH THE STUDENTS.  WHEAREAS, IN PRIVATE GOODS ALL THE WORKS ARE DONE UNDER THE GUIDANCE OF THE GOVERNMENT.

Answer 2

Merit Goods are defined as the goods which are provided by both the state and the individual entity. In a Country, for the welfare of its citizens, both Government and the Private institution gives same type of services so that the consumer have the different sets of choices.

For example, In India, the Railway sector is now opened for the private players also. Though, they are oriented towards profit making but now the end consumers can have wide range of choices according to their budget.

In contrast of this, Private Goods are those whose ownership is held by the group of individual or a single entity. They are more oriented towards profitability and assurance of better quality of services.

For Example, The Multinational companies, they basically sets their industries and products to that country where there is demand and capability to pay for according to their prices. Car Showrooms are the best example of these.

Why in many countries certain types of education and health care are provided as private goods and not as merit goods?

Countries like Democratic republic of Congo, Cameroon etc has 85% of private participation in Education and Health sector.

The probable reason of this are :-

• Lack of funds with the Government- While coming under the purview of Poor income country, these have no well developed infrastructure which can help the residents to attain a better standard of living. That's the reason why private players came into existence to open the education and health sector as a private entity.

• Unstable Government- The instability of the governance system also led to the private players to enter and dominate the market without any prior laws and regulations. The frequent change in Governance structure is making the social infrastructure and allocation of resources to these sector peril.

• Private vs Merit Goods- Though the private entities charges higher prices than that of Public or state Enterprise, the quality services is at its best by the private firms. This shows instances like why people prefer private more than that of public sector.

• Depends on Disposable Income- there is no denying fact that the income of the person also played an important role in selection of private services over merit goods. If people are earning enough, they try to avail the best thing in the market and so tilt on the private.

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