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Economics Essay And Leisure Service Add in library

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QUESTION:

Should the provision of leisure services be considered as a private good? Using theory discussed in Block 3, outline the arguments as to whether it may be necessary for the government to intervene in the provision of leisure services and comment on any practical limits to government intervention.

 

Answer:

Introduction:

Leisure can be defined as the portion of the day where the workers do not involve themselves in income earning activities or the production of goods and services. In other words the leisure activities are the off-job time when the people usually relax, rest or engage in any form of leisure activities like watching movies or engaging in sports or even sleeping. It is evident that when the economies move towards more developed status then the economies, then the pursuit of leisure becomes more important for the individuals. The main aim of the assignment is assess whether the provision of the leisure services can be considered as a private good. It is also assessed that whether it is necessary for the government to intervene in the provision of leisure services and what can be the possible practical limits to the government intervention.

 

Leisure Service:

Here it needs to be assessed first whether, leisure services are considered as public goods or quasi-public goods. It is known that an environment with a temperature that supports the healthy and comfortable life is the public goods. In such an environment the public can enjoy the goods or service without the reduction of the enjoyment of it (Simonetti et al., 2010). Furthermore, it is also evident that in such environment, no one can be excluded from the enjoyment of the goods unlike in case of private goods where the individuals are excluded if they are not able to pay the price. On the other hand, the quasi public goods are those goods that are partially or wholly non-rival. The quasi-public goods are partially excludable. Here it can be said that in case of pure public goods the free-rider problem is faced as the pure public goods are consumed in large numbers. Thus the central government also provides the quasi-public goods. It is known that the leisure services are non-rival until crowded and they are excludable. Thus it can be said that the leisure facilities are not pure public goods but they are quasi-public goods. The provision of the leisure services can be demonstrated with the help of the following diagram. Here the optimal club membership is evaluated so that extra benefits like swimming pool can be provided.

In the above diagram the optimal quantity is M and the provision of the Quasi-public good will occur at that quantity of membership as at that point the marginal cost equals the marginal benefits.

Government Intervention in Leisure Services:

It is known that the government plays a significant role in the welfare of the public. Thus the role of the government in the intervention of the public good can be discussed here. In the public finance economics the role of the government and the optimal policy choices can be tested against the benchmarks so that the welfare can be maximised (Simonetti et al., 2010). It is known that the pure public goods are provided by the government and they also provide the quasi-public goods. Thus it can be said that the leisure services can also be provided by the government and thus government intervention is also evident in case of leisure services.

It is known that the quasi-public goods are at least partially excludable and they are partially or wholly non-rival. Leisure services are considered as quasi-public goods. It is known that the leisure services provide the required joy and happiness to an individual and the happiness can be subjective to the wellbeing of an individual. It can also be said that the leisure activities can improve the health of an individual and increases their energy. There can also be certain negative impacts on the health if an individual involves in activities like watching TV. There should not be any form of rivalry between the service users and people who are not able to pay for the service can be excluded from the service. Thus the leisure service can also be provided by the private sector as well as the public sector. But in this case the distribution of income should be taken into consideration as well. It is known that some of the leisure facilities or the rec recreational activities cannot be afforded by some group of people and thus it can create several issues (Simonetti et al., 2010). Thus in such cases the government must intervene in the market for the provision of the leisure service as poor people cannot afford the leisure services if they are high priced.

 

There can be various issues that may be faced by the government in case of provision of the leisure facilities in the economy. It is known that redistribution of income and efficient allocation of resources are two key objectives of the government and thus they must take these into consideration. The government may face issues in case of provision of effective units of leisure services in the society. The optimal quantity in the economy cannot be established if there may be presence of externality in the economy. It is known that in the presence of externality, the social costs differ from the private costs and the social benefits and private benefits are also different in this context. Thus the issue can be faced in terms of pricing the service so that each and every individual may enjoy the service Another issue that can be evident is the free-riding problem as the good can be exploited by the individuals if the government intervenes in the market. There is another issue that can be faced in case of government intervention which is the rent-seeking (Simonetti et al., 2010). The government may create rent-seeking which is the expenditure of the resources by those who are competing in order to acquire the rents. These may lead to lobbying for the contracts and positions, acquisition of rents through campaigning for rent-seeking policies and also bribery to the politicians and public officials. It is socially undesirable as the rents only transfer between individuals. It is a form of incompetent provisioning. Thus these are the issues that can be faced in case of government intervention.. It is the responsibility of the government to lower the fiscal inequality and provide efficient amount of services in the community.

Conclusion:

In conclusion it can be said that leisure services are a necessity in the society for the individuals. The leisure activities can help in reducing the tension of work and it provides enjoyment to the individuals and it increases the welfare of the individuals and thus the society as a whole. In this essay it has been established that the leisure activities can be categorised as the quasi-public goods. Here the necessity of the government intervention for the leisure services and the practical limitations to the intervention has been discussed as well.

 

References:

Simonetti, R., Himmelweit, S., Mackintosh, M. and Stone, H. (2010). Doing economics : people, markets and policy. Book 1. Milton Keynes : Open University.

 

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