What Is a Public Good?
A public good is a good or service available to all members of society. This includes infrastructure, law enforcement, national defense, and public health.
Public goods are non-rivalrous and non-excludable. They can be used by anyone and everyone without diminishing the availability of the good or service. And it is impossible to exclude someone from using the good or service.
Characteristics of Public Goods
Public goods have two key characteristics: they are non-rivalrous and non-excludable.
Non-rivalrous
Non-rivalrous means that one person's use of the good or service does not reduce the availability of the good or service for others. For example, clean air is non-rivalrous—one person's use of clean air does not reduce the availability of clean air for others.
Non-excludability
Non-excludability means that excluding someone from using the good or service is impossible. For example, national defense is non-excludable—it is impossible to exclude someone from benefiting from the protection provided by the national defense system.
Kinds of Public Goods
There are two types of public goods: partial public goods and total public goods.
Partial Public Good
A partial public good is a good or service available to all members of society, but where one person's use of the good or service diminishes the availability of the good or service for others.
For example, a highway is a partial public good. One person's use of the highway does not reduce the availability of the highway for others. Still, if everyone uses the highway simultaneously, it can become congested and less available for everyone.
Full Public Good
A full public good is a good or service that is available to all members of society and where one person's use of the good or service does not diminish the availability of the good or service for others.
For example, national defense is a full public good. One person's use of the national defense system does not reduce the system's availability for others.
Examples of Public Goods
There are many examples of public goods, including:
- Infrastructure: Roads, Bridges, and Dams
- Law Enforcement: Police and Fire Protection
- National Defense: The Military and Other Security Forces
- Public Health: Disease Control and Food Safety
- Healthcare: Hospitals and Other Medical Facilities
- Public Education: Schools and Other Educational Institutions
Private Goods vs Public Goods
Private goods are goods or services available to only some members of society.
They are rivalrous, meaning that one person's use of the good or service reduces the availability of the good or service for others. They are excludable, meaning it is possible to exclude someone from using the good or service.
For example, a car is a private good. One person's use of the car reduces the availability of the car for others, and it is possible to exclude someone from using it.
The Free-Rider Problem with Public Goods
One of the challenges with providing public goods is the free-rider problem. The free-rider problem occurs when people refuse to pay for a good or service that they benefit from because they know that others will pay for it.
For example, if a public park is in a neighborhood, some people may choose not to pay taxes to support the park because they know that other people will pay for it. This can lead to a situation where there need to be more funds to maintain the park, and it becomes rundown and unusable.
The Tragedy of the Commons is a specific type of free-rider problem that occurs when people overuse a shared resource, such as a pasture or a fishery because they know that others will pay the costs of the overuse.
For example, suppose each person in a village is allowed to graze their cows on a common pasture. In that case, each person may be incentivized to graze as many cows as possible because they know that the cost of overgrazing will be borne by the community and not by them individually.
This can lead to the degradation of the pasture and the eventual collapse of the grazing system.
Solutions to the Free-Rider Problem
There are several solutions to the free-rider problem:
Taxes
One way to solve the free-rider problem is to tax people who benefit from the public good. This way, everyone who benefits from the good or service pays for it.
Legislation
Another way to solve the free-rider problem is to pass laws that require people to pay for the public good. For example, a law may require every neighborhood household to pay for the upkeep of the public park.
Encouraging Donations
Another solution is encouraging donations from those who benefit from the public good. For example, a public park can encourage donations to maintain the park. Not everyone who uses the park may donate, but those who do will help to offset the costs of those who do not.
Turning the Public Good Into Private
Another solution is to turn the public good into a private good. This can be done by charging people for the use of the good or service. For example, a public park could charge an entrance fee.
The Bottom Line
Public goods are goods or services available to all members of society. One person's use of the good or service does not diminish the availability of the good or service for others.
Many examples of public goods include infrastructure, law enforcement, and public education.
The free-rider problem is a challenge in providing public goods because people may refuse to pay for goods or services because they know others will pay for them.
There are several solutions to the free-rider problem, including taxes, legislation, encouraging donations, and turning the public good into a private good.
FAQs
1. What is a quasi-public good?
A quasi-public good is a good or service with some characteristics of a public good and some of a private good. For example, a road is a quasi-public good because it is available to everyone, but it is also excludable, meaning that people can be excluded from using the road if they do not pay toll fees.
2. What is the difference between the public good and the common good?
The main difference between the public good and the common good is that the latter is non-excludable but rivalrous to some extent, while the former is both non-rivalrous and non-excludable. Another difference is that public goods are usually provided by the government, while common goods can be either privately or publicly owned.
3. Why is the government responsible for providing public goods?
The government is responsible for providing public goods because they are essential to society and the economy. They also offer these goods because the free-rider problem makes it difficult for private companies to deliver them profitably.
4. What is an example of a public good not provided by the government?
A park is an example of a public good that the government does not provide. Parks can be publicly or privately owned, but they are available for everyone.
5. What is a real-life example of a taxation solution to the free-rider problem?
The gas tax is a real-life example of a taxation solution to the free-rider problem. The gas tax is a tax on the purchase of gasoline, and the revenue from the tax is used to maintain public roads. This way, everyone who uses the roads pays for their upkeep.
