Question

Radio stations, tornado sirens, light houses, and street lights are all public goods in that all are nonrival and nonexclusionary. Therefore why does the government provide tornado sirens, street lights and light houses but not radio stations (other than PBS stations)?

Answer 1

Public Good are both non- rivalrous which means that if public good is consumed by one person then its amount available for other people does not get reduced and is non- excludable which means that if public good has been provided then it is not possible to exclude that person to consume.

The reason for providing the tornado sirens, light houses and street lights but not radio stations even when they are public good is because Radio has found a way to collect revenue by selling advertising, which is an indirect way of charging customers by making them listen to them in between the music. Radios hit the potential customers effectively as consumers who purchase the goods advertised are also paying for the radio service, since the advertisement cost is included in the product cost. It is impossible to charge listeners for listening to advertisements. Thus, we can say that radio are excludable only if we take any subscription for listening without advertisements.