10/25/11

Examples of public goods, a list of public goods


Remember the definition of a public good, something that is non-rival, and non-excludable.  Non-rival means that if one person consumes a good, that good can still be consumed by someone else.  For example, a radio station, just because I am listening to a radio station doesn't mean that someone else can't.  An example of a rival good is an apple.  If I eat the apple, you certainly cannot eat it after I am done.



Excludable means that you can prevent someone from consuming the good.  If someone wants to listen to the radio, then they can and no one is able to stop them (as long as they have a radio).  But if someone wants to consume the apple, I can hide it from them, or refuse to sell it to them.  So for something to be non-excludable means that anyone can use it, anytime they want (within reason).

If you do a search on the internet for a "list of public goods", or "examples of public goods", you are going to find the common examples such as national defense, roads/highways, radio stations, and the like.  The truth is that it can be very hard to come up with examples that are both truly non-rival and non-excludable.

The strategy here is to think of things first that are non-rival, things that if one person consumes or enjoys, another person can as well.  Here the list could be things like:

Open space,
Air,
TV,
Movies (or concerts),
Parks,
Scenic views,
Radio,
Hiking,
Water (recreation/use),
Roads,

You get the idea, the majority of these are naturally occurring and aren't available for sale in most stores.  Some of these goods are non-excludable such as air, antenna TV, public parks, radio, public roads and open space.  You will notice that many of the public goods have the term "public" in front of them because they are managed by the government.

Hardin came up with the idea of the tragedy of the commons, which basically said that public goods will be underfunded and over used if they are not regulated.  Because of this phenomena must public goods are managed by the government (think of the road and education system, national defense, clean water and air, those sorts of things).  But some public goods are still managed by private firms.  Because they are non-excludable, firms cannot charge people to use them.  Examples of privately managed public goods are:

Websites (like this one, and wikipedia)
Radio stations
Antenna TV

Notice that each of these goods are a form of media, or information sharing.  They lend themselves to get money through either donations or advertising.  This is why public goods in this form can be privately managed.  Thinks such as clean air, and parks do not lend themselves to be profitable through either donations or advertising and are thus left to the government for management.

A common problem with public goods is that people can free ride.  Free riding means that someone can enjoy the good without paying for it.  This is why most public goods have to be supported by either the government or advertising, because most people will attempt to use the good for free.
Spread the knowledge!
Technorati Digg This Stumble Stumble Facebook Twitter

1 comments:

Anonymous said...

Hi, thanks for this post. It was very concise and easy to follow. Many thanks from Toronto, Canada!

Post a Comment

 

I invite you to join dropbox!

I invite you to join dropbox!
Use the above link for an extra 250MB Free!
All content on this site is the copyright of webmaster. No re-posting is permitted. Powered by Blogger.

Post Archive

| FreeEconHelp.com, Learning Economics... Solved! © 2009. All Rights Reserved | Template Style by My Blogger Tricks .com | Design by Brian Gardner Back To Top