A public good can either be consumed by everyone or by no one. In other words, there is no change in cost when one more person consumes the good. A well-known example is that of national defense. Everyone in Switzerland is protected by the Swiss Army (not to be confused with the Vatican's funny-dressed Swiss Guard). If one more person comes to Switzerland, there is no change in cost to defend him/her.
Public goods are non-excludable and non-rivalrous. To be non-excludable means it is impossible to stop someone from consuming a good or service once it's been providable. The opposite is true if the good is excludable. To be non-rivalrous means that consumers are not competing for the same g/s and, thus, all can enjoy the g/s at the same time. The opposite is true if the good is rivalrous.
Here are some helpful terms and examples
excludable/rivalrous : private goods, i.e. cars and cheese
excludable/non-rivalrous : club goods, i.e. satellite radio
non-excludable/rivalrous : common goods, i.e. fish, deer
non-excludable/non-rivalrous : public goods, i.e. national defense, a dam
Dedicated to my students, past, present and future, and to all students of economics, worldwide, to assist in their pursuit of economics knowledge.
Search This Blog
Showing posts with label private good. Show all posts
Showing posts with label private good. Show all posts
Sunday, February 14, 2010
Subscribe to:
Posts (Atom)