Overview
A public good (Samuelson, 1954) is non-rival (one person’s use does not reduce another’s) and non-excludable (non-payers cannot easily be excluded) — national defence, lighthouses, street lighting. Goods divide into private goods, common-pool resources (rival, non-excludable), club goods (excludable, non-rival) and public goods. Free riding leads markets to under-provide public goods, a market failure usually addressed by tax-funded provision (Olson, 1965). Over-use of commons is the “tragedy of the commons” (Hardin, 1968), though Ostrom (1990) showed communities can govern them. See externalities.
Frequently asked questions
- Must governments provide them?
- Often, but donations, clubs and community rules also work.
References
- Samuelson, P. A. (1954). The pure theory of public expenditure. Review of Economics and Statistics, 36(4), 387–389.
- Olson, M. (1965). The Logic of Collective Action. Harvard University Press.
- Ostrom, E. (1990). Governing the Commons. Cambridge University Press.
- Hardin, G. (1968). The tragedy of the commons. Science, 162(3859), 1243–1248.