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Features of public goods
Non rivalrous
Non excludable
Features of private goods
Rivalry and excludable
Excludability
The degree to which a good can be limited to only paying customers
rivalry
The consumption of the good by one person reduces the availability for others
what problem does non excludability lead to
free rider problem
Why do public goods result in a market failure?
A firm’s objective is profit max
Non-excludability will mean that there are free riders who benefit from your product without paying.
Non-rivalry will mean that people are not competing to benefit from your product
missing market/complete market failure
free goods
abundent in supply, no opportunity cost eg the sky, air
economic goods
have a degree of scasrcity and opportunity cost
the free rider problem
the burden on a shared resource that is created by its use or overuse by people who aren't paying their fair share for it
tragedy of commons
a situation in which individuals with access to a public resource act in their own interest and, in doing so, ultimately deplete the resource
tragedy of commons and environmental market failures
shared environmental resources are overused, exploited, and eventually depleted. for example, overfishing, deforestation, water and air pollution, climate change
