This module begins with an introduction to the concept of market imperfections; namely deviations from the standard assumptions of perfect competition. We then introduce the market imperfection of public goods; goods that are non-excludable and non-rival in consumption, such as roads, bridges, lighthouses, and national defense. These features are shown to cause economic inefficiencies if private firms supply these products in a free market. The power of government taxation can eliminate the free-rider problem and represents one of the widely accepted economic rationales for government, especailly in the provision of national defense. This module also addresses several ethical issues regarding the provision of national defense, such as a respect for authority and loyalty.

Introduction to Market Imperfections - 8 minutes

Public Goods - 34 minutes

Overview of Government Intervention: Good or Bad? - 18 minutes

Ethics in National Security - 13 minutes