Public goods Flashcards
1
Q
what are public goods?
A
goods that are non-excludable and non-rivalrous
2
Q
what does ‘non-excludable’ mean?
A
People can not be excluded from accessing the good, hence non-payers can use the good as well.
3
Q
what does ‘non-rivalrous’ mean?
A
One person’s consumption does not hinder another person from using it as well.
4
Q
What is the free rider problem?
A
individuals are not excluded from using a good without paying which disincentivises firms to produce these goods.
5
Q
How can the government fix the free rider problem?
A
- direct provision
- pay private firms
