public goods

• Public goods


  Goods provided by the government, not through the market mechanism, that have two fundamental characteristics: non-excludable and non-rival
• Characteristics of public goods


  • Non-excludable: No price can be charged to exclude those who haven't paid
  • Non-rival: Quantity available does not diminish upon consumption
• The free rider problem: Individuals have an incentive not to contribute to the provision of public goods, as they can benefit without paying
• If everyone acts as a free rider, there will be no private motive to supply public goods, leading to complete market failure and a missing market
• Quasi-public goods


  Public goods that sometimes show characteristics of private goods (excludable and/or rival)
• Examples of quasi-public goods


  • Roads
  • Beaches
• Excludable


  A good can be priced to exclude those who haven't paid
• Rival


  Consumption of the good diminishes the quantity available for others
• Technology can help make public goods more excludable and rival, potentially allowing for private provision