Public Good

Statement

A public good is a good or service that has the characteristics of non-excludability and non-rivalry in consumption.

• Non-excludability in consumption — the consumption of the good cannot be confined to consumers who have paid for it; it is impossible or prohibitively expensive to exclude non-payers from consuming it.
• Non-rivalry in consumption — the consumption of the good by one consumer does not reduce its availability to another consumer.

Notes

The phrase in consumption is load-bearing and must be stated for both characteristics. Standard examples are national defence and street lighting; a birthday cake is the rivalrous counterexample (each portion eaten leaves less for others). A third characteristic, non-rejectability — a consumer cannot choose to forgo the benefits of a public good once it is provided — is required only at an awareness level under the syllabus. Because these characteristics make a public good unprofitable to supply privately, the free market fails to provide it at all; that mechanism and its remedy are set out in the public-goods problem.