Public Good

Published Oct 25, 2023

Definition of Public Good

Public goods are goods or services that are non-excludable and non-rivalrous in nature. Non-excludability means that once the good or service is provided, it is difficult or impractical to exclude individuals from using or benefiting from it. Non-rivalry means that the consumption of the good or service by one individual does not diminish the amount available for others to consume. Examples of public goods include national defense, public parks, street lighting, and clean air.

Example

To illustrate the concept of public goods, let’s consider a public park. Once the park is built and maintained, it is difficult to exclude individuals from using it. In other words, anyone can enter and enjoy the park without having to pay for it. Additionally, one person’s enjoyment of the park does not diminish the amount of enjoyment available to others. If one person is already in the park, it does not limit or reduce the number of people who can enter and enjoy the park simultaneously.

Now let’s imagine that the park’s management decides to implement a ticketing system and charge an entrance fee to access the park. This would make the park excludable because only those who can afford the fee would be able to enter. It would also create rivalry because the number of people who can enjoy the park at any given time would be limited by the ticket sales.

Why Public Goods Matter

Public goods are important because they provide benefits to society as a whole, regardless of an individual’s ability to pay. They contribute to the overall well-being and quality of life in a community by providing essential services or resources. Public goods also often have positive externalities, meaning they generate benefits beyond those directly enjoyed by the individuals using them. For example, a well-maintained public park can attract visitors, boost local tourism, and enhance property values in the surrounding area.

As public goods are not provided efficiently by the free market due to the free-rider problem (where individuals can benefit from the good or service without contributing to its provision), the government or other public organizations often step in to provide and finance them. This ensures the equitable distribution and availability of these goods for the benefit and enjoyment of all members of society.