Market Failure: Public Goods

These flashcards cover key vocabulary from the lecture on market failure and public goods.

Market Failure

A situation in which the allocation of goods and services is not efficient.

Public Goods

Goods that are non-excludable and non-rivalrous; they are available for everyone to use.

Absence of Property Rights

A condition where property rights are not defined or enforced, leading to potential market failure.

Externalities

Costs or benefits that affect a party who did not choose to incur those costs or benefits.

Excludability

The extent to which individuals can be prevented from accessing a good or service.

Rivalry

The extent to which one person's consumption of a good reduces availability for others.

Private Goods

Goods that are both excludable and rivalrous; consumption by one person limits availability to others.

Common Resource

A resource that is non-excludable but rivalrous; overuse can lead to depletion.

Club Goods

Goods that are excludable but non-rivalrous; access is limited to members.

Free-Rider Problem

A situation where individuals benefit from resources, goods, or services without paying for them.

Tragedy of the Commons

A situation in which individuals use a shared resource to the extent that it gets depleted.

Pigouvian Taxes

Taxes imposed on activities that generate negative externalities to encourage reduced consumption.

Collective Action Problem

A situation in which individuals working independently will not reach an agreement that benefits them all.