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Merit good

A merit good is defined as a good that is better for a person than the person who may consume the good realises.

Due to information failure, merit goods tend to be

under-produced and


The government may feel that people consume too little of things that are good for them: things such as education, preventative health care and sports facilities.

Merit goods produce positive externalities.

The government could either provide them free or subsidise their production.

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Merit goods

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