What Is a Public Good?
A public good is a product that an individual can consume without reducing its availability to others and of which no one is deprived. Examples of public goods include law enforcement, national defense, sewer systems, public parks, and the air we breathe. As those examples reveal, public goods are almost always publicly financed.
- A public good must be both non-rivalrous, meaning that the supply doesn't get smaller as it is consumed, and non-excludable, meaning that it is available to everyone.
- A public good is subject to a free-rider problem, as some people will take advantage of using it while refusing to help pay for it.
- A quasi-public good is one for which either availability or supply is somehow compromised.
Understanding Public Goods
A public good must generally be both “non-rivalrous” and “non-excludable.” Non-rivalrous means that the goods don’t dwindle in supply as people consume them. Non-excludability means that the good is available to all and cannot be withheld, even from people who do not contribute to its public funding.
Special Considerations of Public Goods
Non-excludability leads to what is called the free-rider problem with public goods. As you need not contribute to the provision of a public good to benefit from it, some people will inevitably choose to use the good and yet decline to help pay for it. People who refuse to pay their taxes, for example, are essentially taking a “free ride” on revenues provided by those who do pay them, as do turnstile jumpers on a subway system.
The opposite of a public good is a private good, which is limited in both availability and supply and generally costs money.
Public Goods vs. Private Goods
The opposite of a public good is a private good, which is both excludable and rivalrous. It can only be used by one person at a time, and that person can prevent its use by others, such as in the case of a wedding ring. It may also be destroyed in the using, such as when a slice of pizza is eaten, which makes its use by others impossible. It generally costs money, which pays for its private use. Some people argue that the privatization of public goods would eliminate the free-rider problem as well as cut costs and increase efficiency.
Variants of Public Goods and Private Goods
Some public goods are excludable, however, notably those that have nominal costs. Those charges, however small, create a barrier to at least some people using them. An example is the post office. It’s excludable because, while it’s provided for the public, it isn’t free. There are costs, such as those for stamps, that must be paid.
Conversely, certain private goods can be non-excludable and so resemble public goods as much or more than private ones. Two examples are broadcast radio and TV. Anyone who can afford to buy a radio or TV may enjoy the broadcasts at no charge, regardless of whether or not they buy the goods and services whose advertisements support the cost of the broadcasting.
What Is a Quasi-Public Good?
Another hybrid type of good is described as “quasi-public.” Sometimes characterized as “near-public” or “impure public” goods, these can in some ways both dwindle in supply and become unavailable, or at least compromised in availability, under some circumstances.
Examples of Quasi-Public Goods
Classic examples are public beaches and roads. In both cases, they’re open to all, but their capacity is finite. Once the beach is full, no further people may enjoy it. Once the road becomes choked with traffic, its utility diminishes at best, and it may even become entirely inaccessible.
Short of building more roads or creating more public beaches, the leading solutions to the problem of finite capacity tend to make these quasi-public goods still more compromised, economically speaking. Charging a beach fee or collecting tolls only increases excludability, making these quasi-public goods less than pure in their accessibility to all.