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Characteristics of Public Goods Explained

Public goods are characterized by non-excludability and non-rivalry. National defense and clean air are examples of pure public goods that are both non-excludable and non-rival. National defense provides protection to all citizens regardless of individual contributions. Clean air can be breathed by one person without reducing the amount available to others. Some goods exhibit characteristics of both public and private goods, such as Netflix, which is excludable through subscriptions but non-rival in consumption. Public goods are difficult for private markets to provide efficiently due to these traits.

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Asif Kakakhail
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119 views3 pages

Characteristics of Public Goods Explained

Public goods are characterized by non-excludability and non-rivalry. National defense and clean air are examples of pure public goods that are both non-excludable and non-rival. National defense provides protection to all citizens regardless of individual contributions. Clean air can be breathed by one person without reducing the amount available to others. Some goods exhibit characteristics of both public and private goods, such as Netflix, which is excludable through subscriptions but non-rival in consumption. Public goods are difficult for private markets to provide efficiently due to these traits.

Uploaded by

Asif Kakakhail
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

ASSIGNMENT: 2

Submitted by: Asif kakakhail


Submitted to:
Course: Public Sector Economic
Department: Economics
Date: 15-OCT-2023
Define public good with example. Elaborate different aspects of public
goods with examples.

Public goods are a classification of items in the field of economics that demonstrate two
fundamental features: the inability to exclude anyone from consuming them and the lack of
competitiveness among consumers. Public commodities include distinctive attributes that set
them apart, since they are commonly supplied by the government or through a collective
method, given that the private market frequently struggles to effectively distribute them.

let's analyse and examine these two traits by providing examples

Non-excludability: Public products has the characteristic of being non-excludable, which


implies that it is exceedingly difficult to prevent anyone from deriving benefits from the good
or service once it has been made available. Put simply, individuals can reap the advantages of
a public asset without incurring any costs or having the ability to hinder others from benefiting.
This gives rise to a "free-rider problem" as individuals might reap the advantages without
making any contributions.
Illustration: National Defence serves as a quintessential instance of a public benefit. An
effectively fortified nation confers advantages upon all its inhabitants, irrespective of their
direct financial contributions. Providing safety to one individual does not diminish the level
of protection accessible to others.
Non-rivalry: Public goods exhibit non-rivalrous characteristics, wherein the utilisation of the
good by one individual does not diminish its accessibility to others. Put simply, when one
individual uses a public good, it does not reduce the amount or quality of the benefit that is
available to others.
Illustration: Unpolluted air is a communal asset. In terms of clean air, the act of one person
breathing it does not diminish the supply of clean air for others. This characteristic is known
as non-rivalrous. Furthermore, clean air is non-excludable, as it is difficult to prevent folks
from benefiting from it once it becomes accessible.
Public commodities are frequently distinguished from private products, as the latter are both
capable of excluding others from their use and subject to competition. For example, a
hamburger is classified as a private good due to its excludability (the ability to prevent someone
from purchasing it) and its rivalry (the consumption by one person diminishes the amount
accessible for others).
Nevertheless, it is crucial to acknowledge that not all products may be easily classified under
these specific categories. Certain commodities can possess characteristics of both public and
private goods, commonly referred to as "mixed goods" or "club goods." For example, a
streaming service that operates on a subscription model, such as Netflix, is somewhat exclusive
(only accessible to members) yet non-competitive (the usage of one individual does not impact
the quality of the service for others).
To summarise, public goods are items that cannot be restricted from use and do not diminish
in availability when used, making it difficult for the private market to efficiently offer them.
Illustrative instances comprise the safeguarding of a nation, the preservation of air quality, and
the establishment of communal green spaces. Comprehending these facets of public goods is
essential for policymakers when contemplating their provision and funding.

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