Why would merit goods be under consumed?

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1075061

2026-08-17 23:15

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Merit goods are often under-consumed because individuals may not fully appreciate their benefits, leading to lower demand than is socially optimal. Additionally, merit goods are typically associated with positive externalities, meaning their consumption generates wider societal benefits that individuals may overlook. Factors such as income constraints, lack of information, or perceived high costs can also deter consumption. As a result, government intervention is often needed to encourage higher consumption levels through subsidies or public provision.

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