What I learned on class last week

Public sectors are important:

• -       Resources are taken under control
• -       Non-trustable things like defense must be controlled.
• -       Employee
• -       Ownership of strategic resources
• -       Country may lack capital in private sector
• -       Protection of the public interest
• -       Is able to provide goods for social benefit

Outsourcing: obtain (goods or a service) from an outside or foreign supplier, esp. in place of an internal source

Government doesn’t have enough money for running prisons so it outsources it to a private firm.

Public Goods: provided equally to everybody so people don’t have to compete for its use.

Non-excludable (quantity available) ---- Non- rivalrous (benefit available)

If you were a private sector company would you be supplying public goods?

Because of the free rider problem you won’t get any money. Profit must come from the people using the lighthouse but you can’t get that money. Private investors have no reason to provide public goods because of the free rider problem.

Merit goods: everybody needs them but not everyone has the ability to pay them if it is provided by the private sector.

Franchisor- IB

Franchisee- Koç school