A public good is a commodity or service that every member of a society can use without reducing its availability to all others. Typically, a public good is provided by a government and funded through taxes.
Examples include a town road, park, or school. National defense, clean air, and drinking water are critical public goods.
Key Takeaways
- A public good is the opposite of a private good, which is consumed only by the person or people who can afford to pay for it.
- A public good can be consumed by many people without restricting its availability to others.
- There’s always debate about what should be a public good versus a private good.
- These debates are decided by government spending priorities.
How Public Goods Work
The main criteria that identify a public good are that it must be non-rivalrous and non-excludable. Non-rivalrous means that the goods do not decrease in supply as more people consume them. Non-excludability means that the good is available to all citizens.
The Free-Rider Problem
The free-rider problem is a point of contention. A public good is available to all people, whether they have paid for it or not. Some members of society use the good but are unable or unwilling to help pay for it. Thus, people who do not pay taxes are essentially taking a “free ride” provided by those who do pay taxes.
Examples of Public Goods
National defense, law enforcement, and clean air and water are notable examples of public goods.
Private Goods vs. Public Goods
Private goods are both excludable and rivalrous. They can only be used by one person at a time—a piece of jewelry, for example. Some consumable private goods, such as a slice of pizza, are utilized in the act of consumption.
Characteristics of Private Goods
Private goods generally cost money and are not available to everyone, allowing them to exclude non-payers and often subject to diminishing in availability as more people use them.
Quasi-Public Goods
In some cases, public goods are not fully non-rivalrous or non-excludable. For example, a town swimming pool is a public good some believe can be used by any resident, but there might be a nominal entry fee. Similarly, some goods can be both public and private, termed “quasi-public” goods. For instance, a country’s road system is available to all but can become congested and less valuable during rush hour.
Public Goods Around the World
Each nation makes its own decisions on which goods and services should be considered public goods, and this is reflected in their national budgets. For instance, many argue that national defense is a crucial public good, resulting in significant investment in military expenses. Countries often fund multiple services through public taxation, such as increasing trends in taxpayer-supported healthcare and education globally.
What Counts As a Public Good?
Public goods encompass a variety of services and commodities like national defense, police and fire services, clean air, and drinking water.
Main Differences Between Private and Public Goods
Private goods are consumed exclusively by one person, often bearing a cost that limits access. Public goods are available to all, with one person’s use not impeding another’s.
What Is a Quasi-Public Good?
Quasi-public goods display elements of both public and private goods. Examples include a public bridge, losing value when congested, or a public museum charging an entrance fee but receiving some public funds for its upkeep.
The Bottom Line
A public good is a commodity or service accessible to every member of society, unyielding in supply regardless of usage. Common examples include national defense, clean air, and public education. Conversely, private goods diminish in availability as they are consumed.
Related Terms: private goods, free-rider problem, national defense, public education, government services.
References
- USAspending. “Department of Defense (DOD)”.
- New York State Department of Health. “Foreign Countries with Universal Healthcare”.
- Our World In Data. “The Evolution of Education Outcomes”.
