A government acknowledges that constructing a new bridge would create a positive net benefit for society. Because there are insufficient public funds, the bridge would need to be constructed and run by a private company, which would then charge members of the public to cross it. Private companies maintain that building the bridge would not be profitable. What might account for the companies’ reluctance to build the bridge?
- AA private company will be unable to obtain the consumer surplus of the users.
- BBuilding the bridge will give rise to negative externalities.
- CThe demand for bridge crossings is price-inelastic.
- DThe potential benefits are non-excludable.