National radio time signal in Veloria

Read the extracts and answer the questions that follow.

Text A — A shared signal

1. Veloria broadcasts an accurate national time signal used by transport operators, broadcasters and households. One user's reception does not interfere with another's, and receivers cannot feasibly be restricted to contributors.

2. A voluntary industry levy has raised less than the service costs. The government argues that taxation could overcome the free rider problem, although tax revenue has an opportunity cost.

Table 1 — Voluntary industry levy

Voluntary industry levy data for the national time signal.

Text B — Production and reliability

1. The government communications agency currently maintains the atomic clock. Direct provision offers clear public accountability and continuity.

2. Private electronics firms claim that contracting out would encourage innovation and lower operating costs. However, only two firms have suitable equipment, and service interruptions would disrupt railway and communications systems.

Table 2 — Direct-provision estimates

Annual estimates for direct provision of the national time signal.

Coastal water-quality reports in Lydon

Read the extracts and answer the questions that follow.

Text A — Publicly available reports

1. Lydon's coastal authority tests seawater and publishes contamination reports. Open reports are non-excludable, and one fisher or swimmer using a report does not reduce its usefulness to others.

2. Advertising on the report website has not covered testing costs. Because the reports are openly available, users and businesses can benefit from them without paying for testing. Some potential advertisers may therefore free ride rather than contribute to finance the reports.

Table 1 — Advertising finance

Advertising finance for coastal water-quality reports

Text B — Policy choice

1. Direct provision could guarantee testing in low-income and remote communities. However, officials may not know how frequently residents want beaches to be tested.

2. Under a proposed contract, a private laboratory would perform tests while the authority published the results. This may lower laboratory costs, but incomplete contracts and weak monitoring could produce government failure.

Table 2 — Direct-provision estimates

Annual estimates for direct provision of coastal testing

Navigation lighthouse in Navora

Navora's main shipping channel is bordered by dangerous reefs. A lighthouse signal can be observed by every ship in the channel, including ships that have not paid for it. One ship observing the signal does not reduce its availability to other ships.

A shipping association has proposed financing the lighthouse through voluntary subscriptions. The government is also considering direct provision. Table 1 provides relevant annual information.

Table 1: Shipping and lighthouse information

Annual shipping and lighthouse information for Navora.

The government estimates that the average economic cost of each serious shipping accident includes damage to ships and cargo, emergency services and disruption to the port.

Crop-pest forecasting in Meridia

Read the extracts and answer the questions that follow.

Text A — National forecasts

1. Meridia's agricultural institute proposes an open crop-pest forecasting platform. Once a forecast has been produced, use by an additional farmer does not meaningfully increase the cost or reduce availability. Preventing non-paying farmers from receiving radio forecasts would be impractical.

2. Although the platform has public-good characteristics, collecting field observations, employing scientists and maintaining computer systems use scarce resources. Voluntary farmer payments may therefore leave the service below the socially desirable quantity.

Refer to Table 1 for the voluntary farmer scheme estimates.

Voluntary farmer scheme estimates

This creates market failure, which is a situation in which an unregulated market does not allocate resources in a way that maximizes social welfare. Society may value protection from a regional flood-monitoring network, but each resident would prefer others to finance it. If everyone reasons that way, the network may not be supplied at all, or it may be provided below the socially desirable level.

Text B — Government intervention

1. The government could use direct provision through the agricultural institute. Forecasts may reduce crop losses and stabilize rural incomes, but taxation would have opportunity costs.

2. Alternatively, a private analytics company could operate the platform under contract. Its specialist expertise may lower costs, although the accuracy of forecasts and rural coverage would require monitoring.

Refer to Table 2 for the direct-provision estimates.

Table 2: Direct-provision estimates

Open disease-genome database in Norland

Read the extracts and answer the questions that follow.

Text A — Sharing laboratory information

1. Norland proposes a database containing genetic information about newly identified pathogens. Researchers can use the same records simultaneously, so the database is non-rivalrous. Restricting access could slow the detection of dangerous outbreaks.

2. Donations from laboratories have been unreliable because laboratories expect to use records uploaded by others. The database may therefore be underprovided despite benefits to public health.

Table 1 — Laboratory donations

Laboratory donations and annual database costs in Norland.

Text B — Security and production

1. A public health agency could directly operate the database, maintaining democratic accountability and national continuity. However, public procurement may be slow.

2. The government could instead contract software development to private firms. Competitive tendering might promote innovation, but cybersecurity quality is difficult to observe and poor contract design could lead to government failure.

Annual estimates for direct operation of the disease-genome database.

Table 2 — Direct-provision estimates

National accessibility map in Eridia

Read the extracts and answer the questions that follow.

Text A — Open mapping

1. Eridia plans an online map showing wheelchair-accessible routes and public facilities. After the map is created, an additional user can consult it without significantly increasing costs. The map's information will be released openly, and preventing non-payers from accessing or sharing it would be impractical and costly.

2. A charity currently finances updates through donations. Because contributions are voluntary, funding is unstable, and the charity is concerned about the number of free riders.

Table 1 — Charity finance

Charity finance for the accessibility map

Text B — Provision options

1. Government direct provision could ensure nationwide coverage, including rural locations that attract few donations. However, central officials may collect outdated information.

2. Contracting regional surveys to mapping firms may improve local expertise and speed, but fragmented contracts could produce inconsistent standards and administrative costs.

Table 2 — Direct-provision estimates

Annual estimates for direct government provision of the accessibility map in Eridia.

Volcanic-ash flight information in Kambara

Read the extracts and answer the questions that follow.

Text A — Aviation information

1. Kambara has several active volcanoes. A proposed service would publish volcanic-ash forecasts used by airlines, airports and nearby communities. One user's access does not reduce availability to another user, and excluding non-paying communities would undermine safety.

2. Airlines have offered voluntary contributions, but each airline has an incentive to rely on payments made by competitors. The service therefore has the potential to be underprovided by the market.

Table 1 — Airline contributions

Airline contributions to volcanic-ash forecasting service

Text B — Reliability and contracts

1. The meteorological agency could undertake direct provision, financed from taxation. This may ensure continuity, although public-sector wages make it difficult to recruit specialist scientists.

2. Contracting out forecasting models could give access to international expertise. However, a contractor might reduce testing that is difficult to observe, and business failure could transfer risks back to taxpayers.

Table 2 — Direct-provision estimates

Annual estimates for direct provision of volcanic-ash forecasts.

Pollinator-monitoring network in Tavira

Read the extracts and answer the questions that follow.

Text A — Ecological information

1. Tavira proposes a national database showing changes in wild pollinator populations. Farmers, researchers and the public can use the same data without reducing its availability. Once published, it is impractical to prevent non-contributors from benefiting.

2. Agricultural associations attempted voluntary finance, but many firms withheld payment. The resulting underprovision may reduce society's ability to respond to falling pollinator numbers.

Table 1 — Association finance

Association finance estimates for the pollinator-monitoring network.

Text B — Implementation

1. A government conservation agency could operate field stations directly. This would strengthen accountability but might involve bureaucratic delay and inaccurate estimates of the amount of monitoring society wants.

2. Alternatively, private ecological consultancies could collect observations under contract. Competitive tendering may reduce cost, while difficult-to-observe sampling quality may create a risk of government failure.

The direct-provision estimates are shown in Table 2 below.

Table 2 — Direct-provision estimates

Near-Earth-object observations in Soland

Read the extracts and answer the questions that follow.

Text A — Open astronomical data

1. Soland's observatories identify asteroids that may pass close to Earth. Once observations are published, simultaneous use by scientists, insurers and other countries does not reduce their availability. Foreign users cannot feasibly be excluded.

2. Domestic insurers proposed voluntary subscriptions, but each insurer can benefit from publicly announced observations without paying. This international free rider problem weakens expected private revenue.

Table 1 — Insurer subscriptions

Insurer subscription estimates for open asteroid observations.

Text B — National provision

1. The government could finance and operate observatories directly. National control may strengthen continuity and accountability, but borrowing could increase public debt and future servicing costs.

2. Private aerospace firms could instead be hired under contract. Specialist expertise and innovation may improve detection, but only a few firms can compete and the government would remain responsible if a contractor failed. This separation of public finance from private production is contracting out.

Table 2 — Direct-provision estimates

Annual estimates for direct government provision of near-Earth-object observations in Soland.

Coastal storm-warning system in Bellaria

Bellaria is exposed to severe coastal storms. A warning system would provide siren and mobile-phone alerts to all households in the coastal region. Once an alert has been issued, one household receiving it does not reduce its availability to other households, and households cannot feasibly be excluded from receiving the warning.

The government is considering either direct provision by its national emergency agency or contracting production and maintenance to a private firm. Relevant information is shown in Table 1.

Table 1: Warning-system information

Information about storm damage, households and the costs of each warning-system provision option.

Under either option, warnings would remain freely available to all households. Government officials are concerned that the quality of maintenance under a private contract may be difficult to observe until a severe storm occurs.

National cyber-threat bulletin in Estara

Estara is considering a national cyber-threat bulletin that would publish warnings about newly detected malicious software. Once produced, the bulletin could be accessed simultaneously by all businesses without reducing its usefulness to any one business. Because the warnings must be disseminated rapidly and may be copied or forwarded, preventing non-paying businesses from accessing them would be impractical or prohibitively costly; exclusion would also undermine the rapid sharing needed to limit cyberattacks.

Table 1 shows estimates for businesses that would benefit from the bulletin.

Table 1: Cyberattack risks and losses

Estimated cyberattack risks and losses for businesses in Estara, with and without direct provision of the national bulletin.

Table 2 compares direct provision by Estara's national cybersecurity agency with contracting the technical work to a private firm. All figures are annual. For this question, assume that contracting out would produce a bulletin with the same effectiveness as direct provision, including the same attack probabilities shown in Table 1.

Table 2: Provision options

Annual costs and access conditions for the two bulletin provision options.

Regional flood-monitoring service in Darsenia

Darsenia is considering a flood-monitoring service for two river districts. Sensor data and evacuation warnings would be freely broadcast throughout both districts. Residents could not feasibly be excluded from receiving the information, and additional users would not significantly increase the cost of supplying it.

A survey elicited households' stated annual willingness to pay, meaning their stated monetary valuation, for the service. Table 1 presents the survey results and selected income information.

Table 1: Household benefits and income

Survey estimates of household benefits and income by river district.

Table 2 compares two methods of government-financed provision.

Table 2: Provision options

Annual costs and access conditions for the two flood-monitoring provision options.

The government is considering financing direct provision through a uniform annual household levy.

Space-debris tracking in Orinthia

Orinthia launches commercial and scientific satellites. A proposed tracking service would publish collision warnings openly. Once the information is produced, one operator's use does not reduce its availability to another operator. Operators outside Orinthia could also use the warnings without contributing to their production.

The government invited voluntary contributions from domestic satellite operators before deciding whether to fund the service. Table 1 shows the results.

Table 1: Voluntary contributions

Voluntary annual contributions offered by domestic satellite operators in Orinthia.

Table 2 shows estimated annual collision risks and government provision costs.

Table 2: Risks and provision options

Estimated annual collision risks and provision costs for space-debris tracking options.

Under contracting, a private aerospace firm would operate the tracking equipment, while the government would finance the service and publish the warnings openly.

Mountain avalanche-warning network in Calida

Calida's mountain region has 120000 households. A network of sensors and radio transmitters would warn residents and visitors about avalanches. Everyone within the broadcast area can receive a warning, regardless of whether they have paid.

A charity has attempted to finance the network through donations. The government is considering replacing this arrangement with direct provision or a contract with a specialist private firm. Relevant information is shown in Table 1.

Table 1: Funding and risk estimates

Funding, avalanche-risk and provision estimates for Calida's warning network.

The damage figures are conditional on a damaging avalanche: if one occurs, damage is 20 million calids without an effective warning and 8 million calids when the system works. If the system fails, damage is 20 million calids. Assume system failure is independent of the occurrence of a damaging avalanche, and that the stated failure probabilities apply during any damaging avalanche.