Public goods have two defining characteristics. They are non-rival and non-excludable. A public good is one for which consumption is non-rival and from which it is impossible to exclude a consumer. A good is non-rival if consumption of one unit by one person does not decrease available units for consumption by another person. The second feature of a public good is that it is non-excludable. A good is non-excludable if it is impossible, or extremely costly, to prevent someone from benefitting from a good who has not paid for it.
Air quality is an important environmental example of a public good. Under most circumstances, one person’s breathing of fresh air does not reduce air quality for others to enjoy, and people cannot be prevented from breathing the air. Public goods are defined in contrast to private goods, which are, by definition, both rival and excludable. A public good is a good or service that can be consumed simultaneously by everyone and from which no one can be excluded. Pure public goods pose a free-rider problem.
Private goods have two characteristics - rival and excludable. A private good is one for which consumption is rival and from which consumers can be excluded. A good is rival if consumption of one unit by one person does decrease available units for consumption by another person. A private good is also excludable. A good is excludable if it is possible to prevent a person from enjoying the benefits of a good if they have not paid. A sandwich is a private good because one person’s consumption clearly diminishes its value for someone else, and sandwiches are typically excludable to all individuals not willing to pay.
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Types of Goods:
Types of Economics
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