Private producers have no incentive to provide public goods because:

• A. public goods always generate negative externalities
• B. the government strictly prohibits private provision of public goods
• C. they cannot easily exclude non-payers from benefiting
• D. public goods are always less valuable than private goods

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the definition of public goods. Public goods are characterized by two main features: non-excludability and non-rivalry. Non-excludability means that it is difficult or impossible to prevent individuals who do not pay from consuming the good, and non-rivalry means one person's consumption does not reduce availability for others.
2. Step 2: Analyze why private producers might hesitate to provide public goods. Since they cannot easily exclude non-payers, they face the 'free rider problem,' where individuals can benefit without contributing to the cost, reducing the incentive for producers to supply the good.
3. Step 3: Evaluate the other options given: negative externalities are not a defining feature of public goods, government prohibition is not universally true, and public goods are not necessarily less valuable than private goods.
4. Step 4: Conclude that the key reason private producers have no incentive to provide public goods is due to the difficulty in excluding non-payers, which undermines their ability to earn revenue from supplying the good.
5. Step 5: Summarize that this characteristic leads to market failure in the provision of public goods, often justifying government intervention or public provision.