public and private goods

What are public goods

They are non rival and non excludable - an extra person wot impact others, and the benfefits can it be condoned solely to those using it

What are private goods

Rival and excludable

Examples of public goods

National defence

Street lighting

Police service

Flood defences

What are quasi public goods

Goods which have some elements of public goods e.g. either non rival or excludable or semi

Why is a public good a market failure

◻ The characteristics of public goods lead to what is called ‘missing markets’ I.e. if left to the free market there will be no provision at all This is because the non-excludability makes it difficult or impossible to charge people for using the product

As a result it is not profitable to provide the good

◻ The lack of possible profit means that public goods

will have to be provided by the public sector

What is the free rider problem

Because of non-excludability, if a public good is

provided, it is impossible to prevent people from

using the provision, even if they choose not pay for

it

◻ Public goods are a market failure because if left to

the free market there will be no provision of the good at all