Externalities and Public Provision of Education

Abstract

This paper investigates the role of government in providing education, especially at the regional and local level. The public (or semi-public) good nature of education and the presence of externalities in the production and consumption process can lead to situations of market failure. Consequently the market can be driven to solutions that are not socially efficient and that’s the fundamental reason to defend the public provision of education. But there is also a role to be developed by the private school, in this market.

Locally, the economic analysis points to an important public role in the provision of educational services, especially at the level of basic education. The justification is based mainly on grounds of fairness, that is, the more or less universal access to the benefits of education being the central issue.