Public good

Public Good

A public good is a concept in economics and public policy that refers to a good that is both non-excludable and non-rivalrous. This means that individuals cannot be effectively excluded from use, and use by one individual does not reduce availability to others. Public goods are typically provided by the government or through collective action because they would be underprovided in a purely free market economy.

A lighthouse is a classic example of a public good.

Characteristics

Public goods have two main characteristics:

• Non-excludability: It is not possible to prevent people from using the good. For example, a lighthouse provides light to all ships in its vicinity, and it is not feasible to exclude any ship from benefiting from the light.

• Non-rivalrous consumption: One person's use of the good does not diminish the ability of others to use it. For instance, the enjoyment of a national park by one visitor does not reduce the enjoyment available to others.

Examples

Common examples of public goods include:

• National defense: Protects all citizens of a country without diminishing in value as more people are protected.
• Public parks: Open to all and do not diminish in quality as more people visit.
• Street lighting: Provides illumination to all passersby without reducing the light available to others.

National parks are public goods that provide recreational opportunities for everyone.

The Free Rider Problem

The free rider problem occurs when individuals can benefit from a good without paying for it, leading to underproduction or depletion of the good. Since public goods are non-excludable, people may choose not to contribute to their provision, expecting others to bear the cost. This can result in insufficient provision of the good.

The free rider problem is akin to stowaways benefiting without contributing.

Provision of Public Goods

Public goods are often provided by the government through taxation, as the market may fail to supply them in adequate quantities. Governments can ensure that public goods are available to all, overcoming the free rider problem.

The Samuelson Condition

The Samuelson condition is a principle in public economics that provides a rule for the efficient provision of public goods. It states that the sum of the marginal rates of substitution between a public good and a private good should equal the marginal cost of providing the public good.

The Samuelson condition helps determine the optimal provision of public goods.

Related Concepts

• Common-pool resource: A resource that is rivalrous but non-excludable, such as fisheries or groundwater.
• Private good: A good that is both excludable and rivalrous, such as a sandwich or a car.
• Club good: A good that is excludable but non-rivalrous, such as a subscription service.

Related Pages

• Public economics
• Market failure
• Collective action

Public transportation is often considered a public good due to its accessibility and benefits to society.