public goods, private goods, quasi goods Flashcards
public good definition
a public good refers to a commodity or service that is made available to all members of a society. Typically, these services are administered by governments and paid for collectively through taxation
two characteristics of public goods
Non rivalrous
non excludability
what is a non excludable good
if consumed does not prevents others from consuming the good
what are non rivalrous goods
the benefits other people get from the goods does not diminish if more people consume the good
how does non excludability cause the free rider problem
people who do not pay still receive the benefits of the public – so they are underprovided in private sector – as they don’t make profit as there is no need to pay for the good
what are private goods
a product or service produced by a privately owned business and purchased to increase the utility, or satisfaction, of the buyer
two characteristics of private goods
rivalrous and excludable
for example apple can only be consumed by one person + private property rights can be used to prevent others from consuming a good
what are quasi public goods
has characteristics of both private and public goods
- partially provided by free market - such as roads - but partially private as there can be road tolls - part of the M6
how is technological change significant
television broadcasting is now excludable with subscriptions available for those willing to pay
what is the tragedy of the commons
refers how individuals prioritise personal gain over soiceties well being
problem of tragedy of commons
When held in common – no one owns the resource – but everyone can access it
Such as air – leads to negative externality of air pollution – this is market failure that results from common access
