9: public goods and common goods Flashcards
excludable
if people
(ordinarily, people who have not
paid for it) can be prevented from
using it.
rival
if one person’s consumption of a good necessarily diminishes another person’s consumption of it.
*Private Goods:
Excludable; Rival in consumption
*Public Goods:
Not excludable; Not Rival
*Common Resources:
Not excludable; Rival
*Natural Monopolies:
Excludable; Not Rival
A good is excludable if someone can be prevented from using it. A
good is rival in consumption if one person’s use reduces other’s ability
to use the same unit of the good.
Markets work best for private goods, which are excludable and rival
in consumption. Markets do not work well for other types of goods.
Public goods, such as national defense and fundamental knowledge,
are neither excludable nor rival in consumption.