Public and Private goods
rival vs non-rival goods
A good if rival if one person's use diminishes other peoples' use. Examples- fishing in a river, drinking coffee.
Non rival goods
A good is nonrival if consumption by one party does not reduce the ability of another person to consume it. Examples- watching the sunset at SUNY Oswego, hearing a tornado siren.
Tragedy of the commons examples etc
Common goods get used more than is desirable from the standpoint of society. Examples: overfishing, littler This occurs because some natural resources are non-excludable but rival. Finning is a way to deal with the tragedy of the commons
Solutions to free riders
Due to free riders, private firms will not produce public goods. (Think how many people utilize private libraries and how it would work.) Taxes- make everyone pay taxes to support the public good. Make the public goods private (mercenaries?) Solicit donations
Free riders
Free-riders are people who are receiving a public good without paying for it. Public goods create a free-rider problem because consumers are able to use the public goods without paying for them.
Private goods
Private goods- both rival and excludable Examples- food, clothing.
Public goods
Pure Public Goods- both non- rival and non-excludable Examples: national defense, public libraries, streethlights
Examples of free riders
You go to a free art museum without paying. You listen to NPR without donating. You don't pay taxes but get the benefit of the national defense You hop on free wifi without consuming anything.
non-excludable good
a good for which it is difficult (or very costly) to prevent consumption by those who do not pay
excludable good
a good for which it is easy to prevent consumption by those who do not pay
Tragedy of the Commons
a parable that illustrates why common resources are used more than is desirable from the standpoint of society as a whole