Difference between revisions of "Public good"
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(Added government connection from Economics Lecture Fourteen. I'm not in the course, but the lecture was interesting - thanks!) |
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| − | A '''public good''' is a [[good]] which is nonexcludable and nondepletable. The first condition means that it is impossible to | + | A '''public good''' is a [[good]] which is nonexcludable and nondepletable. The first condition means that it is impossible to keep anyone from partaking in the good, and the second condition means that one consumer's consumption of the good does not prevent others from consuming it. It is therefore inefficient for private companies to produce public goods, since they cannot ensure that customers pay them for it. Therefore, the government produces most public goods so it can collect compensation through taxes. |
| − | Explained another way, a public good is available to all such that consumption by one person does not reduce its availability to others. | + | Explained another way, a public good is available to all such that consumption by one person does not reduce its availability to others. |
| + | |||
| + | ==Examples== | ||
| + | * National defense. It protects every resident of the country, and one person's partaking of it does not diminish its benefits to others. | ||
| + | * Public parks. | ||
| + | * The Internet. | ||
[[Category: Economics]] | [[Category: Economics]] | ||
Revision as of 05:05, December 14, 2009
A public good is a good which is nonexcludable and nondepletable. The first condition means that it is impossible to keep anyone from partaking in the good, and the second condition means that one consumer's consumption of the good does not prevent others from consuming it. It is therefore inefficient for private companies to produce public goods, since they cannot ensure that customers pay them for it. Therefore, the government produces most public goods so it can collect compensation through taxes.
Explained another way, a public good is available to all such that consumption by one person does not reduce its availability to others.
Examples
- National defense. It protects every resident of the country, and one person's partaking of it does not diminish its benefits to others.
- Public parks.
- The Internet.