1.3.3 Public goods

PUBLIC GOOD

• they’re non-rivalry and non-excludable

• E.G. street lights- cannot prevent someone using the

  street light nor does their use prevent someone else seeing the light

NON-RIVALRY

• means that one person's use of the good doesn't stop someone else from using it

NON-EXCLUDABLE

• meaning that you cannot stop someone from accessing the good

QUASI-PUBLIC GOOD

• goods which aren't perfectly non-rivalry and non-excludable but aren't perfectly rival or excludable

• E.G.- 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

PRIVATE GOOD

• rivalry and excludable

• most goods

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 (free rider)

• 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

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