Micro:3 Public Goods Flashcards
What are Public Goods?
Goods that are non-excludable, non-rivalrous, and non-rejectable.
Define non-excludability.
Benefits derived from their consumption cannot be confined solely to those who have paid for it.
Define non-rivalry.
Each party’s enjoyment of the good or service does not diminish others’ enjoyment.
Define non-rejectability.
The benefits of a public good cannot be rejected by people.
What is a free rider?
An individual who benefits from the production of a good without paying for it.
What are the main characteristics of public goods?
- Non-excludability
- Non-rivalry
- Non-rejectability
Are vaccines a pure public good?
No, because their supply is limited and they can be rivalrous.
What is a quasi-public good?
A near-public good that has some characteristics of a public good.
What does semi-non-rival mean?
Up to a point, more consumers using a good do not reduce availability for others.
What does semi-non-excludable mean?
It is possible but difficult or costly to exclude non-paying consumers.
What leads to the free-rider problem?
The non-excludable nature of public goods.
Why does the private sector struggle to provide public goods?
Lack of profit motive leads to under-provision.
What is market failure in the context of public goods?
Misallocation of resources due to the inability of the private sector to profit from public goods.
Why should the government provide public goods?
- Prevent under-provision
- Improve social welfare
- Achieve economies of scale
What are some issues with government provision of public goods?
- Lack of competition
- Poor value for money
- Political self-interest
What are global public goods?
Goods that benefit every country, regardless of which ones provide them.
Give examples of global public goods.
- Security from war
- Rule of law
- Disease eradication
- Non-proliferation of nuclear weapons
How has technology changed the nature of public goods?
Advances blur the distinction between public and private goods.
What is the difference between pure and quasi public goods?
Pure public goods satisfy all three criteria fully; quasi-public goods satisfy some.
What distinguishes public goods from merit goods?
Merit goods are excludable, rivalrous, and rejectable, while public goods are not.
What is the relationship between public goods and positive externalities?
Public goods generate positive externalities, leading to the free-rider problem.
True or False: Public parks are considered public goods.
True.
