8.3

• Private good definition

  A good which is excludable and rival
• what are private goods characteristics?

  1. excludable - owners can exercise private property rights, preventing other people from using the good or consuming its benefits e.g shopkeeper can prevent people from consuming goods on display, unless they’re prepared to pay for it
  2. rival - consumption of a product prevents others from consuming the product (can be referred to as diminishability - quantity for others diminishes)
• non-excludable goods meaning

  public goods that cannot exclude a certain person or group of people from using such goods. as a result, restricting access to the consumption of non-excludable goods is nearly impossible
• Non-rival good meaning

  Public goods that are consumed by people but supply is not affected by peoples consumption
• public good definition

  a good which is non-excludable and non-rival e.g radio programme
• the provision of public goods by private firms is likely to result in a market failure due to the concepts of free riders
• free-rider definition

  individual who benefits from the consumption of a good without paying for it due to issue of non-excludability
• what is the problem with the free-rider concept?

  no incentive for firms to produce the good as there will be no market and no profit. therefore, creating a missing market
• public goods are often provided by government and/or charities
• public goods are also non-rectifiable. this means that once provided, people will benefit from them even if they don’t want to
• examples of public goods

  • police services
  • street lighting
  • roads
  • radio stations
• quasi-public goods definition

  good which is not fully non-rival and/or where it is possible to exclude people from consuming the product
• what can public goods be divided into?

  • pure public goods
  • quasi-public goods
• what is a pure public good?

  where its impossible to exclude free-riders
• Methods can be devised to convert quasi-public goods into private goods by excluding free-riders e.g electronic pricing of road use
• examples of quasi-public goods

  roads - semi-excludable through tolls and semi-non-rival because consumers can benefit from the road whilst consumers using it, unless rush hour
• example of how technological change can be significant for public and private goods?

  television broadcasting is now excludable with subscription available to those willing and able to pay for them
• what is the tragedy of commons ?

  refers how individuals prioritise personal gain over the well-being of society
• example of how technology change helped change public goods into private goods

  governments or local authorities can use electronic pricing to charge all motorists for road use