1.3.3 Public goods

Question 1

Public goods

Answer 1

goods which are both non-rivalrous and non-excludable

Question 2

Non-excludability

Answer 2

The benefits derived from the consumption of a good cannot be solely to those who have paid for it.

E.G. fireworks

Question 3

Non-rivalrous

Answer 3

The consumption of a good by one person doesn’t reduce the amount of availability for others.

E.G. Netflix

Question 4

Free rider problem

Answer 4

•because public goods are non-excludable it’s difficult to charge people for benefiting once a product is available.
•The free rider problem leads to under provision of a good and thus causes market failure.
•free riders have no incentive to reveal how much they are willing and able to pay for a public good because they can enjoy the benefits without paying

Question 5

Global public goods

Answer 5

these are goods which benefit every country, irrespective of which ones provide them.

E.G. security from war, violence, and crime, eradication of diseases

Question 6

Quasi-public goods

Answer 6

A good which has some of the characteristics of a public good

Semi non-rivalrous: more consumers using a park beach or road reduce the space available for others as eventually they become crowded

semi non-excludable it’s possible but difficult or costly to exclude non-paying consumers
E.G. fencing a park or beach and charging an entrance fee

Question 7

Tragedy of the commons

Answer 7

when no one owns a resource, it may get overused – people use and benefit from a common resource without regard to the effects on others. Overuse of a renewable resource can lead to a long-term decline in maximum sustainable yield.

E.G. fish stocks and deforestation