What is private property?
A private good is a product that must be purchased to be consumed, and the consumption of one individual prevents another from consuming it. In other words, a good is considered a private good if there is competition between individuals to obtain the good and if the consumption of the good prevents someone else from consuming it.
Economists qualify private goods as rivals and exclusive.
Key points to remember
- Private goods are goods that must be purchased to be consumed and whose ownership is limited to the group or individual who purchased the goods.
- Private goods are different from public goods, accessible to all, regardless of income levels.
Understanding private goods
Examples of private goods include air travel and cell phones. Private goods are less likely to encounter the problem of stowaways because private goods must be purchased; it is not readily available for free. The objective of a company in the production of a private good is to make a profit. Without the income incentive, a business is unlikely to want to produce the good.
Private property is an item that can only be used or consumed by one party at a time. Many tangible tangible goods are eligible because they can only be used by those who have access to them. Any item that is actually destroyed or rendered unusable at its original destination by its use, such as food and toilet paper, is also private property.
Often, private goods have limited availability, which makes them exclusive by nature. For example, only a certain number of a certain pair of branded shoes are produced, so not everyone can have these shoes. Not only is a single pair considered private property, but the whole range of products can be included.
The majority of private goods must be purchased for a cost. This cost compensates for the fact that the use of the good by one prevents the use of the good by another. The purchase of the article guarantees the right to consume it.
A private good is the opposite of a public good. Public goods are generally open to everyone and their consumption by one party does not prevent another party from using it. It is not excluded either; preventing the use of the property by another is not possible. Many public goods can be consumed free of charge.
Water fountains in public places would be considered public property, since they can be used by anyone and there is no reasonable possibility of using them completely. Public television received over the air and local AM or standard FM radio are also eligible, as an unlimited number of people can watch or listen to the program without affecting the ability of others to do so.