Public Good

Public Good

What is a public good?

A public good is a product that an individual can consume without reducing his availability to others and of which no one is deprived. Examples of public goods include law enforcement, national defense, sewer systems and public parks. As these examples show, public goods are almost always publicly funded.

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Characteristics of public goods

Economists call public goods “non-competitive” and “non-exclusive”, and most of these goods are both. Their non-rivalry refers to the fact that goods do not decrease as people consume them; The defenses of a country, for example, do not run out or decrease as its population increases. Non-exclusion means exactly that; the property is accessible to all and cannot be refused, even to people who do not contribute to its public funding.

This characteristic, in turn, leads to what is called the stowaways problem of public goods. Since you do not need to contribute to the provision of a public good in order to benefit from it, some people will inevitably choose to use the good while shirking the public responsibility to help pay. A person who refuses to pay their taxes, for example, essentially does a “free spin” on the income provided by those who pay it.

Certain public goods are however excluded, in particular those which have nominal costs. These fees, however small, create a barrier for at least some people who use them. An example is the post office. This is excluded because, although it is provided to the public, it is not free; fees such as stamps must be paid.

Conversely, some private goods can be non-exclusive, and thus resemble public goods as much or more than private goods. Commercial radio and television shows are one example. Anyone can take advantage of it for free, whether or not they buy the products and services whose advertisements bear the cost of broadcasting.

What is a quasi-public good?

Another type of hybrid good is described as “quasi-public”. Sometimes referred to as “quasi public” or “unclean public” goods, they can in a way reduce their supply and become unavailable, or at least compromised in availability, in certain circumstances. The classic examples here are beaches and public roads. In both cases, they are open to everyone, but their capacity is limited. Once the beach or its parking lot is full, no one will be able to enjoy it. Once the road is obstructed by traffic, its usefulness diminishes at best and may even become completely inaccessible.

Unless you build more roads or create more public beaches, the main solutions here tend to make these public goods even more economically compromised. Charging beach fees or collecting tolls only increases excludability, making these public goods less than pure in their accessibility to all.

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