1.3.3 Public Goods

• Public goods are non-excludable and non-rival.
• Public goods are under provided in a free market because of the free-rider problem.
• Characteristics of a Public Good

  1. Non-rival
  2. Non-excludable
• Non-rival means that the consumption of a gold by one person does not effect the amount available to others.
• Non-excludable means that no one can be excluded from consuming the good.
• The free-rider problem occurs with public goods, because people who do not pay for the good still receive the benefit from it.
• Public goods are underprovided because it is difficult to measure the value consumers receive from them so there is no market for them as they are not profitable.
• Quasi public goods have characteristics of both public and private goods and are partially provided by the free market.