Public good (economics)

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== Public Good (Economics) ==

A public good in economics is a good that is both non-excludable and non-rivalrous. This means that individuals cannot be effectively excluded from use and where use by one individual does not reduce availability to others. Public goods are a central topic in public economics and are often contrasted with private goods, which are both excludable and rivalrous.

Characteristics

Public goods have two main characteristics:

• Non-excludability: It is not possible to exclude individuals from the good's consumption. For example, national defense protects all citizens regardless of whether they contribute to its funding.
• Non-rivalry: One person's consumption of the good does not reduce the amount available for others. For instance, one person's enjoyment of a public park does not diminish the enjoyment of others.

Examples

Common examples of public goods include:

• National defense
• Public parks
• Street lighting
• Clean air

Free Rider Problem

The free rider problem occurs when individuals can benefit from a good without paying for it, leading to under-provision of that good. This is a common issue with public goods, as people may rely on others to contribute to the provision of the good while they enjoy the benefits without contributing themselves.

Solutions

Several solutions have been proposed to address the free rider problem, including:

• Government provision: The government can provide public goods funded through taxation.
• Voluntary contributions: Encouraging voluntary donations or contributions to fund public goods.
• Privatization: Converting public goods into private goods where feasible, though this is not always possible or desirable.

Related Concepts

• Common-pool resource
• Club good
• Merit good
• Externality

See Also

• Public economics
• Market failure
• Collective action
• Tragedy of the commons
• Social choice theory