Non provision of public goods

• What are public goods?

  Goods which benefit many people rather than just one person
• What are the two characteristics of public goods?

  They are non-excludable and non-rivalrous
• What is a non-excludable good?

  A good that is available for everybody and is excluded from nobody
• What is a non-rivalrous good?

  A good where consumption by one person doesn't limit consumption by other people
• What is an example of a public good?

  Street lighting
• What is the free rider problem?

  When individuals benefit from a public good without paying for it
• How does the free rider problem cause the market to fail?

  There would be less people willing to pay for the good, and firms would decrease supply as it would not be profitable for them to provide it