Level: SL and HL
Some goods benefit everyone, yet no private firm will supply them, because no one can be made to pay. Public goods are the clearest case of a market that is missing altogether.
2.9.1 Public goods: non-rivalrous and non-excludable
Definition
A public good is a good that is non-rivalrous and non-excludable.
Non-rivalrous means one person's consumption does not reduce the amount available to others.
Non-excludable means it is impossible, or very costly, to stop people who have not paid from consuming the good.
| Excludable | Non-excludable |
|---|
| Rivalrous | Private goods: food, clothing, smartphones | Common pool resources: fish stocks, groundwater (topic 2.8) |
| Non-rivalrous | Club or quasi-public goods: streaming services, toll roads, cinemas | Public goods: national defence, street lighting, flood defences, lighthouses |
Many goods are quasi-public: they have public-good features only partly. A road is non-rivalrous until it becomes congested, and non-excludable unless tolls are charged.
Example
Public goods around the world. The Netherlands' Delta Works protect millions of people from North Sea flooding; no resident can be excluded from that protection, and one person's protection does not reduce another's. India Meteorological Department forecasts and cyclone warnings benefit everyone in an affected region. The US government provides the GPS satellite signal free to users worldwide, and India operates its own regional navigation system, NavIC.
🔒 Also in the full notes
- 2.9.2 The free rider problem
- 2.9.3 Government intervention in response to public goods
- Exam practice: 5 questions with mark allocations
- 2 exemplar answers with full model answers and examiner commentary
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