A public good can either be consumed by everyone or by no one. In other words, there is no change in cost when one more person consumes the good. A well-known example is that of national defense. Everyone in Switzerland is protected by the Swiss Army (not to be confused with the Vatican's funny-dressed Swiss Guard). If one more person comes to Switzerland, there is no change in cost to defend him/her.
Public goods are non-excludable and non-rivalrous. To be non-excludable means it is impossible to stop someone from consuming a good or service once it's been providable. The opposite is true if the good is excludable. To be non-rivalrous means that consumers are not competing for the same g/s and, thus, all can enjoy the g/s at the same time. The opposite is true if the good is rivalrous.
Here are some helpful terms and examples
excludable/rivalrous : private goods, i.e. cars and cheese
excludable/non-rivalrous : club goods, i.e. satellite radio
non-excludable/rivalrous : common goods, i.e. fish, deer
non-excludable/non-rivalrous : public goods, i.e. national defense, a dam
No comments:
Post a Comment