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Explain why public transport, such as buses and trains, might be under…
Explain why public transport, such as buses and trains, might be under-provided in a market economy
Market economy
decisions regarding investment, production and distribution are done by a country's individual citizens and businesses
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Examples: USA, Japan, etc,
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Private entities
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Hence, they have more economic power
Since it works for profit, it becomes necessary for them to provide goods and services of best quality
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Public transport is cheaper than private transport. Because of its cheap price, people should prefer to use public transport more than private transport
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This could be because in a market economy, the prices are determined by individuals and businesses.
Businesses would want to work for profit and hence would make promotions or discounts, improve quality, manufacture new models, etc. that would attract consumers.
Since in a market economy there is little or no intervention of the government, public transport may find it difficult to get more customers. One reason could be financing.
Private transport has more economic power because they own resources that are valuable. Hence, they are more powerful than public transport.
Many countries (with a market economy system) are developed countries. In these countries, it becomes more difficult for public transport to operate because people are well-off and they prefer private vehicles.
Since the demand for public transport is less (due to the mentioned reasons), public transport might be under-provided in a market economy.
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