A municipal authority finances the installation and operation of a river-level telemetry network that broadcasts real-time flood risk alerts to all businesses in a river basin.
The primary reason for public funding of this service is that it is:
non-excludable and non-rival, which leads to the free-rider problem and a missing market if left to the private sector.
rival and excludable, which means private firms would overprovide the service due to high profit margins.
non-excludable but rival, which results in the tragedy of the commons as businesses overconsume the broadcast alerts.
excludable but non-rival, which allows private firms to charge users but leads to a socially inefficient underconsumption of the alerts.
