Private Good


DEFINITION of 'Private Good'

A product that must be purchased in order to be consumed, and whose consumption by one individual prevents another individual from consuming it. Economists refer to private goods as "rivalrous" and "excludable". If there is competition between individuals to obtain the good and if consuming the good prevents someone else from consuming it, a good is considered a private good.

BREAKING DOWN 'Private Good'

A private good is the opposite of a public good. Examples of private goods include food, airplane rides and cell phones.

Private goods are less likely to experience the free rider problem because a private good has to be purchased - it is not readily available for free. A company's goal in producing a private good is to make a profit. Without the incentive created by revenue, a company is unlikely to want to produce the good.

  1. Public-Private Partnerships

    A business relationship between a private-sector company and ...
  2. Public Good

    A product that one individual can consume without reducing its ...
  3. Tragedy Of The Commons

    An economic problem in which every individual tries to reap the ...
  4. Common Resource

    A resource, such as water or pasture, that provides users with ...
  5. Economics

    A social science that studies how individuals, governments, firms ...
  6. Free Rider Problem

    1. In economics, the free rider problem refers to a situation ...
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