Public Good

A public good is a product that one individual can consume without reducing its availability to others and from which no one is deprived. Examples of public goods include law enforcement, national defense, sewer systems, and public parks. As those examples reveal, public goods are almost always publicly financed.

Economists refer to public goods as "non-rivalrous" and "non-excludable," and most such goods are both. Their non-rivalry refers to the fact that the goods don't dwindle in supply as people consume them; a country's defenses, for example, do not run out or diminish as its population grows. Non-excludability means just that; the good is available to all and cannot be withheld, even from people who do not contribute to its public funding.

That characteristic, in turn, leads to what is called the free-rider problem with public goods. Since 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 shirk the public responsibility to help pay for it. Someone who refuses to pay their taxes, for example, is essentially taking a "free ride" on revenues provided by those who do pay them.

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; costs such as those for stamps must be paid.

Conversely, certain private goods can be non-excludable, and so resemble public goods as much or more as private ones. An example is commercial radio and TV broadcasts. Anyone may enjoy those at no charge, regardless of whether or not they buy the goods and services whose advertisements support the cost of the broadcasting.

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. Classic examples here are public beaches and roads. In both cases, they're open to all, but their capacity is finite. Once the beach, or its parking lot, are 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 here tend to make these public goods still more compromised, economically speaking. Charging a beach fee or collecting tolls only increases excludability, and so makes these public goods less than pure in their accessibility to all.