Public Goods and imperfect Competition

Public good

A good that is non-excludable and non-rivalrous in competition.

Merit good

A good that can be provided competently by the private sector, desired by society, e.g., education.

Demerit good

A good for which the government restricts access, e.g., tobacco.

Positive externality

Occurs when a product has beneficial effects for third parties, often resulting in too little quantity produced.

Negative externality

Occurs when an action or product has harmful effects for third parties, often resulting in too much quantity produced.

Perfect competition

A market structure where no seller has the power to influence prices, characterized by many small firms, identical products, perfect information, and free entry and exit.

Price taker

An individual seller in perfect competition that cannot influence the market price and must accept it as given.

Social cost of monopoly

The total cost to society arising from the monopolistic market structure, including both private and external costs.