Merit good

A merit good is defined as a good that is better for a person than the person who may consume the good realises.

Due to information failure, merit goods tend to be

under-produced and

under-consumed


The government may feel that people consume too little of things that are good for them: things such as education, preventative health care and sports facilities.



Merit goods produce positive externalities.



The government could either provide them free or subsidise their production.