public good articles

Economists define a public good according to two criteria: it is non-rival (a person using or appreciating a public good does not diminish someone else's ability to do the same) and non-excludable (everyone has access to the good, or no one can be excluded from it). One example of a public good is national defense. When a country organizes a military to protect its borders from foreign threats, that protection is non-rival (the appreciation of national defense by any citizen does not reduce the appreciation of it by other citizens) and non-excludable (because the military defends the entire country from external threats, no one can be excluded from it). Other common examples of public goods are clean air, lighthouses, flood-control systems, and fireworks at a Fourth of July celebration. A similar term is a quasi public good, which is non-excludable but can become rival at high levels of usage; these include public parks and highways, which become rival as more people use them and create crowds or congestion.

A central concern with public goods is the “free rider problem.” Because no one can be excluded from a public good, there is no incentive to contribute financially to enjoy it. As a result, public goods are typically not provided by private companies, which usually want to be able to control the supply of a good in order to charge a fee. Instead, public goods are mostly available (or available at a level a society wants) only if provided by the government, which pays for them through tax revenues. However, not all goods provided by the government are public goods, as many do not meet the criteria of being non-rival and non-excludable. For example, government-subsidized housing for the poor excludes people whose income surpasses a certain amount.

New technology has led to the private provision of some public goods. In the twentieth century, for example, radio and television transmission was provided by private companies in the United States, but the transmission was neither rival nor excludable. Anyone could enjoy radio and television shows without diminishing the enjoyment of these shows by other people. Private companies were able to make money, however, by charging other businesses to advertise on their shows.