Chapter 11 - Public Goods and Common Resources

Excludability

the property of a good whereby a person can be prevented from using it

Rivalry in Consumption

the property of a good whereby one person consumes only at the expense of someone else being able to consume the good or one person’s use diminishes use by someone else

Private Good

a commodity or service that is both excludable and rivalrous

Public Good

a commodity or service that is both non-excludable and non-rivalrous

Club Good

a good that is excludable but non-rivalrous

Common Resource

a good that is both non-excludable and rivalrous

Free-Rider

a person or entity that benefits from a public good or service without contributing to its cost

The Free-Rider Problem

a market failure that occurs when individuals benefits from a public good or service without contributing to its cost

Cost-Benefit Analysis

a study that compares the the costs and benefits to society of providing a public good

Tragedy of the Commons

problem of overuse or poor maintenance of a resource when property rights are not clearly established and the resource is non-excludable 

Common Access Resource Problem

the challenge of sustainably managing resources that are non-excludable but rivalrous

Private Property Rights

the legal and economic entitlements that allow individuals or private entities to own, use, control, and transfer resources, assets, and possessions without interference from others, including the government

Non-excludable

the property of a good whereby a person cannot be prevented from using it

Non-rival in Consumption

the property of a good whereby one person’s consumption does not limit someone else from consuming or diminish someone else’s use