Public Goods

Public Goods

• Public goods are consumed collectively
• It is difficult to charge for them directly, so they’re often financed via taxes
• If left to the free market, most public goods wouldn’t be provided

• Non excludability means that the good is provided for all irrespective of whether they have paid for the product indirectly through taxation
• People that use public goods but haven’t paid for its provision are called free riders

• Non-rivalry is also an important characteristic of public goods
• The aforementioned characteristics (non rivalry and non excludability) are ideals of a pure public good – which makes them the opposite of private goods
• In the real world, not all public goods possess both characteristics to the same extent

• Most quasi-public goods tend to be non excludable, but isn’t non-rval
• They therefore have some of the qualities of a private good

See example table