ABSTRACT
This chapter discusses publicly produced externalities, defines as externalities that arise from services that are rendered free or at a subsidized price by the government. The subgroups comprises various direct services that are group-consumption goods; to produce them in marketable form would be too costly or technically impossible. The various direct services are the several services rendered by the military, public health. The individuals category also consists of various direct services: fire protection, crime prevention. Counter-cycle policy for full employment may be implemented better than with most government services, by varying the timing of large capital inputs without altering appreciably the time pattern of output over the long period. The value of military output to the individual is reflected in the community demand for deterrence and damage limitation. The several major group-consumption services for which discrimination in level of service is feasible among subgroups of the policy-formulating and financing groups are street construction and maintenance, and flood control and drainage.
