Type of Markets and Their Characteristics Term Paper

Type of Markets and Their Characteristics - Term Paper Example In the market there are those goods that are referred to as public goods, these goods are provided by the government due to various reasons, the reasons why the government provide these goods are because the provision of these goods is too expensive for firms to provide. Also due to the fact that the provision of these goods by firms may not yield economic profits and the government will source revenue from taxes in order to provide public goods. Public goods include products such as roads, railway roads and education. The government will provide these gods given that they require huge investment and the returns are relatively low. However problems arise whereby the market may exhibit the free rider effect, this refers to the situation whereby some individuals in the economy do not pay taxes yet they enjoy public goods, therefore it is evident that the market cannot function without public goods and therefore the role of the government in the market is to provide public goods.