Public Goods

Public goods is a term that refers to one type of market failure. They represent a specific type of goods. Key features of public goods are:

• Non-rivalry of the consumption - consumption of the goods by one individual does not reduce availability of the goods for consumption by others
• Non-excludability of the consumption - in term of costs, it is not reasonably possible to exclude any customer from the consumption

Sometimes a third feature can be added:

• Zero marginal costs on providing goods to additional consumers - marginal costs of providing public goods to additional consumers are zero*

Public goods are one of the characteristic products of the public sector, respectively public administration. However, not all public services are public goods - it can be a publicly provided private goods.

Use of public goods in practice: Resolution on public and private goods is used in decision making, whether a given type of goods can effectively provide the private sector, or whether it is more preferable provider the public sector.

Related terms and methods:

• Club goods
• Common goods
• Goods
• Private goods

Related disciplines:

• Economics
• Economy and Finance