1.3.3: Public Goods

• Non excludable: You cannot stop someone from using a good
• Non rivalry: Usage of a good by one person does not stop someone else using the good
• Public goods are non rivalry and non excludable
• Pure public good: A good that is always non rivalry and non excludable
• Quasi public good: A good that has some but not all public good characteristics or is not public all the time
• An example of a quasi public good is television, as you need to pay a license fee but afterwards it is free
• Free rider problem: Where someone benefits from a good without paying for it. Because public goods are non excludable it is difficult to charge consumers when others will get the same benefit for free
• The solution to the free rider problem is government provision of public goods
• Advantage of government provision: Increases public sector investment
• Advantage of government provision: Equal access for all people to public goods
• Disadvantage of government provision: Government provision is expensive, and resources may be better used elsewhere