Classification of Merit and Demerit Goods
- Merit goods are products that are beneficial for society but the free market does not provide enough of them
- Demerit goods are products which have harmful impacts on consumers or society
- Value judgements play a role in determining whether goods are classified as merit or demerit goods
- Some goods are clearly defined as being a merit or demerit good, such as education (merit good) and illegal drugs (demerit good)
- The classification of some goods can be unclear as it is based on a value judgement
Classification of Goods Based on Value Judgements
Good |
Merit good |
Demerit good |
Cannabis |
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Contraception |
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