Public Good

AAA

DEFINITION of 'Public Good'

A product that one individual can consume without reducing its availability to another individual and from which no one is excluded. Economists refer to public goods as "non-rivalrous" and "non-excludable". National defense, sewer systems, public parks and basic television and radio broadcasts could all be considered public goods.

INVESTOPEDIA EXPLAINS 'Public Good'

One problem with public goods is the free-rider problem. This problem says that a rational person will not contribute to the provision of a public good because he does not need to contribute in order to benefit.





For example, if Sam doesn't pay his taxes, he still benefits from the government's provision of national defense by free riding on the tax payments of his fellow citizens.



RELATED TERMS
  1. Zero-Sum Game

    A situation in which one person’s gain is equivalent to another’s ...
  2. Public-Private Partnerships

    A business relationship between a private-sector company and ...
  3. Private Good

    A product that must be purchased in order to be consumed, and ...
  4. Free Lunch

    A situation in which a good or service is received at no cost, ...
  5. Diner's Dilemma

    A game-theory situation with several players. Similar to a prisoner's ...
  6. Tragedy Of The Commons

    An economic problem in which every individual tries to reap the ...
Related Articles
  1. How Influential Economists Changed Our ...
    Fundamental Analysis

    How Influential Economists Changed Our ...

  2. The Austrian School Of Economics
    Economics

    The Austrian School Of Economics

  3. The Uncertainty Of Economics: Exploring ...
    Economics

    The Uncertainty Of Economics: Exploring ...

  4. The History Of Economic Thought
    Economics

    The History Of Economic Thought

comments powered by Disqus
Hot Definitions
  1. 80-10-10 Mortgage

    A mortgage transaction in which a first and second mortgage are simultaneously originated. The first position lien has an ...
  2. Passive ETF

    One of two types of exchange-traded funds (ETFs) available for investors. Passive ETFs are index funds that track a specific ...
  3. Walras' Law

    An economics law that suggests that the existence of excess supply in one market must be matched by excess demand in another ...
  4. Market Segmentation

    A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will ...
  5. Effective Annual Interest Rate

    An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following: ...
  6. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
Trading Center