2.10 Public Goods Flashcards
What are the key characteristics of public goods?
- Non-rivalry in consumption
- Non-excludability in consumption
- Non-rejectability
- Zero marginal cost in supply
What are pure public goods?
Products which display the characteristics of non-rivalry and non-excludability fully
What are quasi-public goods?
Products which are nearly public goods; they are non-excludable and/or non-rival in consumption to varying degrees
What is a free rider?
A consumer who benefits from consuming a product even though they do not contribute to provision because they do not pay
What can be said about the market for pure public goods?
There is a “missing market”
What is the market failure of quasi-public goods?
There is an under-allocation of resources to quasi-public goods
What is non-excludability?
When individual consumers cannot be excluded from consuming a product
What is non-rivalry?
When consumption of a product/resource by one individual does not limit the consumption of the product/resources by other individuals
What is non-rejectability?
Where individuals are unable to reject consuming the good/service even if the consumer would prefer not to consume it
What is zero marginal cost in supply?
Once supplied, the cost of supplying to an additional individual is zero
What is non-diminishability?
When one consumer uses the good, the stock available to other users/consumers does not diminish
