Public Good
What is Public Good?
A public good is non-excludable and non-rival: no one can be excluded from it, and one person's use does not reduce another's.
National defense and street lighting are classic examples. Because users cannot be excluded, markets underprovide public goods due to the free-rider problem. They are usually funded by government through taxation.
Public Good: a worked example
Three residents share a dark street. Ana would pay up to $40 for a streetlight, Ben up to $30, and Chris up to $20. Because the light is non-rival, all three consume the same unit at once, so society's marginal benefit is the vertical sum 40 + 30 + 20 = $90. Installing the light costs $60, and since $90 exceeds $60 it should be built, creating $30 of net gain. Nobody builds it alone, because the highest single valuation, Ana's $40, falls short of the $60 price. Non-excludability makes voluntary funding fragile as well, since the light shines on anyone who contributes nothing. A compulsory charge of $20 each covers the cost and leaves Ana $20 ahead, Ben $10 ahead, and Chris exactly even.
The mistake students make with public good
Non-rival gets confused with unlimited capacity. A crowded highway or a packed municipal pool gets labelled a public good because no gate stops entry, yet every extra driver slows the others down, which is rivalry. Congestion is what breaks the classification. A road anyone may use that fills up is a common resource, non-excludable but rival, and its problem is overuse rather than underprovision. Test both properties at the level of use the question describes, since an empty road can be non-rival while the same road at rush hour is not.
Public Good questions
Why do markets underprovide public goods?
Non-excludability means a firm cannot withhold the good from anyone who refuses to pay, so each person has an incentive to enjoy it while hoping others fund it. Free riding hides true willingness to pay, revenue falls short of cost, and no profit seeking supplier steps forward even when total benefit exceeds total cost. Tax funded government provision is the standard remedy because taxes are compulsory.
What is the difference between a public good and a common resource?
Both are non-excludable, so the split comes down to rivalry. A public good is non-rival, meaning one more user takes nothing away from anyone else, as with a lighthouse beam. A common resource is rival, so one more user leaves less for everyone, as with fish in an open ocean. Markets underprovide public goods and overuse common resources, and the two problems call for different policies.
Is a public park a public good?
A public park qualifies only while it stays uncrowded and open to all. An empty field is non-rival, since another visitor takes nothing from anyone, and non-excludable when there is no fence or gate. Add a ticket booth and it becomes excludable, and let it fill on a holiday and it becomes rival. Classify from the conditions the question describes rather than from the word public in the name.
Related terms
Common comparisons
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