Public Goods Flashcards
Examples of public goods
Street lights
Public Parks
Lighthouses
Roads
What is non-excludble
When you cannot exclude someone else from consuming your good
What is non-rival
When your consumption of the good does not prevent anyone else from using it
What are the 2 characteristics of private goods
They are rival and excludable
What are the 2 characteristics of public goods
Non excludable
Non-rival
What is the free rider problem ?
When consumers wait for others to buy and free-ride(use it for free), which means that no one will ever demand the good and producers wont supply because everyone will want to use it for free and they cant make a profit. This leads to market failure
Public goods are…
Under provided
How does the government intervene to solve the free rider problem
State provision of public goods
What is state provision of public goods
When the government taxes people using indirect and direct tax, and uses its tax revenue money to provide public goods. Solving the free rider problem
What are quasi-public goods?
When goods are sometimes non-excludable and non rival and sometimes excludable and rival whereas pure public goods are always non-excludable and non-rival
Example of pure public good
Flood defences
Example of quasi-public good
Parks
