1.3.3 Public goods

What are the 2 key characteristics of public goods, and define them?

2 key characteristics of public goods=

• non-rivalry, which means that one person’s use of the good doesn’t stop someone else from using it// consumption by one person doesn’t reduce the amount available to others

• non-excludable, meaning that you cannot stop someone from accessing the good and someone cannot chose not to access the good.

What is an example of a public good?

An example of a public good is streetlights as you cannot prevent someone using the street light nor does their use prevent someone else seeing the light.

What are quasi-public goods or non-pure public goods?

Quasi-public goods or non-pure public goods are goods which aren’t perfectly non-rivalry and non- excludable but aren’t perfectly rival or excludable. One e.g would be roads, which are semi-excludable, as there could be tolls, and semi-rivalry as people don’t ‘use up’ the roads but congestion causes problems during rush hour.

Private goods are rivarly and excludable: most goods are private goods.

What is the free rider problem?

The free rider problem says that you cannot charge an individual a price for the provision of a non-excludable good because someone else will gain the benefit from it without paying anything. A free rider is someone who receives the benefits without paying for it.

ms: once a public good is provided, it is difficult to make ppl pay for the consumption of it, so there is little financial incentive for firms to supply the good

Why don’t private sector producers will not provide public goods to people?

Private sector producers will not provide public goods to people because they cannot be sure of making a profit , due to the non-excludability of public goods.

Therefore, if the provision of public goods was left to the market mechanism, the market would fail and so they are provided by the government and financed through taxation.