A coastal town's council is considering installing a digital early-warning tsunami broadcast system. Once activated, the emergency sirens and broadcast alerts can be received by any resident in the risk zone without reducing the warning quality received by others, and there is no practical way to restrict the warnings only to paying subscribers.
Which of the following best describes the economic classification of this warning system and the primary market failure associated with it in a free market?
It is a quasi-public good because it is excludable but non-rival, leading to underprovision by private firms who seek to maximize profits.
It is a pure public good because it is non-rival and non-excludable, resulting in the free-rider problem and complete non-provision by the free market.
It is a merit good because its positive externalities are under-consumed, leading to a welfare loss due to underprovision by private firms.
It is a common pool resource because it is non-excludable but rival, leading to the tragedy of the commons and the degradation of the warning network.
