Question

Education is often identified as a "club" good whiclh is defined as a good or service that is non-rival in consumption but is excludable. Assuming you agree with this description, provide answers to the following: 1. What would be the likely outcome if government decided to stop providing education and closed all public schools? 2. How could the government get out of the education business but still affect the number of students attending school?

Answer 1

If Government close down all the public schools which are by definition public goods then agents who can't pay the fees for private school would be certainly excluded which will deteriorate situation further.

Therefore in such scenario education would only be available for those who can afford due to strict exclusion

Ans 2)

Government can pass the laws such as quotas in which atleast some portion of students which can t afford education should be provided with admission in private schools

Government should run quality checks on educational services provided by maintaining supervising body at state or municipal level so just to make sure the quality of education .

This will atleast boost some participation from the agents who can't afford private fees.