1.3.3/1.3.4 Public Goods, Imperfect Information
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6 Terms
1
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public good
causes market failure due to the problem of missing markets
2
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3 main characteristics of public goods
\-non-excludability
\-non-rival consumption
\-non-rejectable
\-non-rival consumption
\-non-rejectable
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non-excludability
benefits derived from pure public good cannot be confined. Non-payers can enjoy benefits of good at no financial cost - free rider problem.
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free rider problem
non-payers can enjoy benefits of a public good at no financial cost (non-excludability)
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non-rival consumption
each party’s enjoyment of the good/service does not diminish other’s enjoyment - marginal cost of supplying public good to an extra person is 0 (available to all)
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non-rejectable
the collective supply of a pure public good for all means that it cannot be rejected by people (street lights)
Note 
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