PEco Module 9

• A good is excludable if people (ordinarily, people who have not paid for it) can be prevented from using it.
• Common grazing land, clean air and congested roads are examples of common resources that can be used without payment, leading to overuse and government attempts to limit their use.
• A good is rival, or subtractable if one person's consumption of a good necessarily diminishes another person's consumption of it.
• Private goods are excludable and rival in consumption.
• Public goods are not excludable and not rival.
• Common resources are not excludable and rival.
• Natural monopolies are excludable and not rival.
• A good is excludable if someone can be prevented from using it.
• Public goods, such as national defense and fundamental knowledge, are provided by the government using cost-benefit analysis to determine how much to provide.
• Common resources are rival in consumption but not excludable.
• Markets do not work well for other types of goods, such as public goods, which are neither excludable nor rival in consumption.
• A good is rival in consumption if one person’s use reduces other’s ability to use the same unit of the good.
• Markets work best for private goods, which are excludable and rival in consumption.