Public Goods Flashcards
What is meant by non rivalrous?
Where the consumption of a good by one person will not prevent others enjoying it.
What are the characteristics of a public good?
Non rivalrous and non excludable.
Also, unlikely to be provided by the market system.
What is meant by non excludability?
Where it is not possible to provide a good to one person without being able to prevent others from enjoying it.
What is meant by the term ‘free rider’?
Someone who won’t pay for something because they know someone else is getting it for free.
Why are public goods not provided by the market system?
The characteristic of non excludability means that individuals often try to consume the good without paying (the free rider problem). This means that firms do not receive enough revenue to make provision of the good profitable.
