Public Goods, Private Goods & Quasi-public Goods Flashcards
Characteristics of public goods
Non- excludable
Non rivalrous
They have no property rights
Examples of public goods and why
Defence and lighthouses and exclude people from benefitting from the provision of these goods
Characteristics of private goods
-excludable
-rivalrous
-have property rights
Examples of private goods
Clothes, food
What is the free rider problem ?
Those who do not want to pay will still receive the benefits
Incentive function of a price breaks down; firms cannot make a profit so the market fails to provide a good for which there is an obvious need- there will be a missing market = complete market failure
How might the government overcome the failure of markets to provide public services
May decide to provide public goods
What is public provision
When the government provides/ funds a good/service - sometimes called state provision
What does state/ public provision include
Schools, hospitals & the police
Is healthcare a public good
No - does not fir the criteria
What is meant by a quasi (non-pure) public good?
Semi-non-excludable
Semi- non rivalrous
Why are quasi public goods considered as semi-non-excludable
It’s difficult to exclude non-paying customers ; however free riders can be excluded so it is possible to turn them into private goods - toll roads for example
How has technology changed the nature of public goods?
Makes it easier to exclude free riders and therefore charge consumers, meaning public goods can become more like private goods
What is the ‘tragedy of the commons’
When common resources get used too much then resources eventually run out
They have no property rights
